Comparing Upstart (NASDAQ:UPST) & Ally Financial (NYSE:ALLY)

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

Institutional and Insider Ownership

63.0% of Upstart shares are owned by institutional investors. Comparatively, 88.8% of Ally Financial shares are owned by institutional investors. 17.3% of Upstart shares are owned by company insiders. Comparatively, 0.5% of Ally Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Upstart	4.86%	9.67%	2.50%
Ally Financial	16.84%	12.11%	0.81%

Volatility & Risk

Upstart has a beta of 2.48, indicating that its share price is 148% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Upstart	$1.04 billion	1.93	$53.60 million	$0.59	34.59
Ally Financial	$7.91 billion	1.43	$852.00 million	$4.36	8.64

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

Analyst Ratings

This is a breakdown of current recommendations for Upstart and Ally Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Upstart	1	9	7	0	2.35
Ally Financial	1	5	10	1	2.65

Upstart presently has a consensus target price of $32.40, suggesting a potential upside of 58.75%. Ally Financial has a consensus target price of $47.93, suggesting a potential upside of 27.28%. Given Upstart’s higher possible upside, analysts clearly believe Upstart is more favorable than Ally Financial.

Summary

Ally Financial beats Upstart on 9 of the 15 factors compared between the two stocks.

About Upstart

Upstart Holdings, Inc. operates an artificial intelligence–based lending marketplace that connects consumers seeking loans with banks and credit unions. Its platform uses machine-learning models and borrower data to help lending partners assess credit risk and make lending decisions. The company’s offerings include personal loans and technology for auto lending, including auto retail and refinancing. Upstart was founded in 2012 by Dave Girouard, Paul Gu and Anna Counselman. Girouard serves as the company’s chief executive officer.

About Ally Financial

Ally Financial Inc. is a U.S. digital financial services company and bank holding company. Its primary businesses include automotive finance and consumer banking, with products and services offered through digital channels and a network of auto dealerships. Through its automotive finance operations, Ally provides loans and leases to vehicle buyers, financing to dealerships, and related services. Ally Bank offers consumer deposit products, including checking accounts, savings accounts and certificates of deposit, as well as lending products.