Is Ally Financial, Inc. overvalued or undervalued?

As of 12 May 2025, the valuation grade for Ally Financial, Inc. has moved from fair to expensive, indicating that the company is currently overvalued. The key ratios highlight this stance, with a P/E ratio of 17, an EV to EBITDA of 29.37, and a Price to Book Value of 1.18. In comparison to peers, East West Bancorp, Inc. has a more attractive P/E ratio of 12.82, while First Horizon Corp. stands at 12.18, further emphasizing Ally's relative overvaluation.
Additionally, Ally's return on equity (ROE) is 6.73%, which is not particularly strong, especially when considering its high dividend yield of 162.52%, which may not be sustainable given its negative return on capital employed (ROCE) of -1.91%. While Ally has outperformed the S&P 500 in the short term, its long-term performance has lagged behind, reinforcing the conclusion that it is currently overvalued in the market.