Analyzing World Acceptance (NASDAQ:WRLD) and Ally Financial (NYSE:ALLY)

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

Risk and Volatility

World Acceptance has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
World Acceptance	0	1	0	0	2.00
Ally Financial	1	7	9	0	2.47

World Acceptance currently has a consensus price target of $10.00, indicating a potential downside of 94.19%. Ally Financial has a consensus price target of $42.80, indicating a potential upside of 5.46%. Given Ally Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Ally Financial is more favorable than World Acceptance.

Earnings & Valuation

This table compares World Acceptance and Ally Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
World Acceptance	$564.84 million	1.66	$89.74 million	$14.82	11.62
Ally Financial	$8.18 billion	1.53	$668.00 million	$1.54	26.35

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

Institutional & Insider Ownership

83.6% of World Acceptance shares are held by institutional investors. Comparatively, 88.8% of Ally Financial shares are held by institutional investors. 41.6% of World Acceptance shares are held by company insiders. Comparatively, 0.7% of Ally Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
World Acceptance	14.29%	18.95%	7.74%
Ally Financial	7.64%	9.48%	0.59%

About World Acceptance

World Acceptance Corporation engages in consumer finance business in the United States. The company provides short-term small installment loans, medium-term larger installment loans, related credit insurance, and ancillary products and services to individuals. It offers income tax return preparation and filing services; and automobile club memberships. It serves individuals with limited access to other sources of consumer credit, such as banks, credit unions, other consumer finance businesses, and credit card lenders. World Acceptance Corporation was founded in 1962 and is headquartered in Greenville, South Carolina.

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.