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Ally Financial Inc. (ALLY) — WACC Analysis

WACC Breakdown

Ally Financial Inc. (ALLY) has a weighted average cost of capital (WACC) of 19.0%. The cost of equity is 10.2%, derived from a beta of 1.37 and a risk-free rate of 5.0%. The after-tax cost of debt is 24.6%. The capital structure is 39.2% equity and 60.8% debt.

Interpretation

A WACC of 19.0% indicates that the market perceives Ally Financial Inc. as higher-risk, requiring a greater return to compensate investors.

Investors can compare ALLY's WACC of 19.0% against industry peers to gauge its relative financing costs. A beta of 1.37 reflects the stock's volatility relative to the broader market.

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VALUATION

ALLY WACC: 18.96% for Ally Financial Inc.

Current inputs imply a 10.23% cost of equity and a 31.12% pre-tax cost of debt. Use this discount rate as a starting point for DCF validation.

[01]Current Market Data
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WACC Calculation Process
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Market Data Loaded
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Company Data Fetched
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Beta Calculated (5Y)
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Inputs Auto-Populated
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WACC Calculated
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Step 2: Enter Ticker Symbol
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Step 4: Review Auto-Populated WACC Inputs

Values are automatically populated from real data. You can adjust them manually if needed.

4.30%
1.000
4.23%
5.00%
21.00%
70.00%
Debt: 30.00%Equity: 70.00%

Please enter a valid company ticker to calculate WACC

Ally Financial Inc. Common Stock (ALLY) WACC Results
Weighted Average Cost of Capital
18.96%
Cost of Equity
10.23%
Risk-Free Rate4.96%
Beta1.37
Market Risk Premium4.23%
Cost of Debt
24.58%
Pre-Tax Cost of Debt31.12%
Tax Rate21.00%
Tax Shield6.53%
Capital Structure
Equity: 39.16%($12.76B)
Debt: 60.84%($19.82B)
Equity Component
4.01%
39.16% × 10.23%
Debt Component
14.96%
60.84% × 24.58%

Ally Financial Inc. (ALLY) WACC in context

Ally Financial Inc. (ALLY) currently screens with an estimated WACC of 18.96%. That blends a 10.23% cost of equity, a 31.12% pre-tax cost of debt, and a 39.16% equity weight into the discount rate you would typically use in a DCF model.

screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

What ALLY WACC implies

A 18.96% discount rate screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

How this page calculates ALLY

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 1.37 and equity accounts for 39.16% of capital.

What to do next

Validate business quality on the company page, then carry the same discount-rate assumptions into the DCF page to test fair value sensitivity.

Disclaimer: This is not financial advice. Data sourced from SEC EDGAR and Polygon.io. Past performance does not guarantee future results. Always conduct your own research before making investment decisions.