Reviewing Open Lending (NASDAQ:LPRO) & Ally Financial (NYSE:ALLY)

Open Lending (NASDAQ:LPRO) and Ally Financial (NYSE:ALLY) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, risk, dividends, analyst recommendations, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Open Lending and Ally Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Open Lending	0	3	3	0	2.50
Ally Financial	1	7	9	0	2.47

Open Lending presently has a consensus target price of $3.10, suggesting a potential upside of 43.52%. Ally Financial has a consensus target price of $42.80, suggesting a potential upside of 10.00%. Given Open Lending’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Open Lending is more favorable than Ally Financial.

Earnings and Valuation

This table compares Open Lending and Ally Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Open Lending	$24.02 million	10.77	-$135.01 million	($1.18)	-1.83
Ally Financial	$8.18 billion	1.46	$668.00 million	$1.54	25.27

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Open Lending	N/A	-48.33%	-17.09%
Ally Financial	7.64%	9.48%	0.59%

Volatility and Risk

Open Lending has a beta of 1.92, suggesting that its stock price is 92% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Insider & Institutional Ownership

78.1% of Open Lending shares are held by institutional investors. Comparatively, 88.8% of Ally Financial shares are held by institutional investors. 13.2% of Open Lending shares are held by insiders. Comparatively, 0.7% of Ally Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Ally Financial beats Open Lending on 9 of the 14 factors compared between the two stocks.

About Open Lending

Open Lending Corporation provides lending enablement and risk analytics solutions to credit unions, regional banks, finance companies, and captive finance companies of automakers in the United States. The company offers Lenders Protection Program (LPP), which is a cloud-based automotive lending platform that provides loan analytics solutions and automated issuance of credit default insurance with third-party insurance providers. Its LPP products include loan analytics, risk-based loan pricing, risk modeling, and automated decision technology for automotive lenders. Open Lending Corporation was founded in 2000 and is based in Austin, Texas.

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.