Financial Survey: Pathfinder Bancorp (NASDAQ:PBHC) & Ally Financial (NYSE:ALLY)

Ally Financial (NYSE:ALLY) and Pathfinder Bancorp (NASDAQ:PBHC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Ally Financial and Pathfinder Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ally Financial	1	7	9	0	2.47
Pathfinder Bancorp	0	0	0	0	0.00

Ally Financial presently has a consensus target price of $40.38, suggesting a potential upside of 7.29%. Given Ally Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Ally Financial is more favorable than Pathfinder Bancorp.

Valuation & Earnings

This table compares Ally Financial and Pathfinder Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ally Financial	$8.83 billion	1.30	$1.02 billion	$2.50	15.05
Pathfinder Bancorp	$72.85 million	1.12	$9.29 million	$0.32	54.19

Ally Financial has higher revenue and earnings than Pathfinder Bancorp. Ally Financial is trading at a lower price-to-earnings ratio than Pathfinder Bancorp, indicating that it is currently the more affordable of the two stocks.

Dividends

Ally Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.2%. Pathfinder Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.3%. Ally Financial pays out 48.0% of its earnings in the form of a dividend. Pathfinder Bancorp pays out 125.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ally Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Ally Financial has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500. Comparatively, Pathfinder Bancorp has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500.

Insider & Institutional Ownership

88.8% of Ally Financial shares are held by institutional investors. Comparatively, 26.7% of Pathfinder Bancorp shares are held by institutional investors. 0.7% of Ally Financial shares are held by company insiders. Comparatively, 22.4% of Pathfinder Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Ally Financial and Pathfinder Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ally Financial	10.84%	8.39%	0.51%
Pathfinder Bancorp	2.42%	1.64%	0.14%

Summary

Ally Financial beats Pathfinder Bancorp on 14 of the 16 factors compared between the two stocks.

About Ally Financial

Ally Financial Inc., a digital financial-services company, provides various digital financial products and services in the United States, Canada, and Bermuda. The company operates through Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments. The Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services. The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contract, and guaranteed asset protection products; and underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory. The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings. The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies; leveraged loans; and commercial real estate product to serve companies in the nursing facilities, senior housing, and medical office buildings. It also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services. The company was formerly known as GMAC Inc. and changed its name to Ally Financial Inc. in May 2010. Ally Financial Inc. was founded in 1919 and is based in Detroit, Michigan.

About Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a bank holding company for Pathfinder Bank that provides various banking and financial products and services in New York. The company's deposit products include checking, savings, and money market deposit accounts; certificates of deposit; and demand and time deposits. Its loan portfolio comprises commercial real estate, commercial, residential real estate, construction, and tax-exempt loans; home equity loans and junior liens; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. The company was founded in 1859 and is headquartered in Oswego, New York.