Critical Survey: First Mid Bancshares (NASDAQ:FMBH) & Ally Financial (NYSE:ALLY)

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

Earnings & Valuation

This table compares First Mid Bancshares and Ally Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Mid Bancshares	$386.95 million	2.36	$68.93 million	$3.25	11.73
Ally Financial	$8.18 billion	1.45	$1.02 billion	$2.60	14.98

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

Risk and Volatility

First Mid Bancshares has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500.

Dividends

First Mid Bancshares pays an annual dividend of $0.96 per share and has a dividend yield of 2.5%. Ally Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.1%. First Mid Bancshares pays out 29.5% of its earnings in the form of a dividend. Ally Financial pays out 46.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Institutional and Insider Ownership

47.6% of First Mid Bancshares shares are owned by institutional investors. Comparatively, 88.8% of Ally Financial shares are owned by institutional investors. 7.7% of First Mid Bancshares shares are owned by insiders. Comparatively, 0.7% of Ally Financial shares are owned by 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.

Analyst Ratings

This is a breakdown of current recommendations and price targets for First Mid Bancshares and Ally Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Mid Bancshares	0	3	2	0	2.40
Ally Financial	1	9	9	0	2.42

First Mid Bancshares presently has a consensus price target of $43.40, suggesting a potential upside of 13.82%. Ally Financial has a consensus price target of $43.76, suggesting a potential upside of 12.36%. Given First Mid Bancshares’ higher probable upside, equities analysts plainly believe First Mid Bancshares is more favorable than Ally Financial.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Mid Bancshares	17.32%	10.38%	1.11%
Ally Financial	11.29%	9.31%	0.57%

About First Mid Bancshares

First Mid Bancshares, Inc., a financial holding company, provides community banking products and services to commercial, retail, and agricultural customers in the United States. It accepts various deposit products, such as demand deposits, savings accounts, money market deposits, and time deposits. The company’s loan products include commercial real estate, commercial and industrial, agricultural and agricultural real estate, residential real estate, and consumer loans, as well as construction and land development, 1-4 family residential properties, and multifamily residential properties loans; and other loans comprising loans to municipalities to support community projects, such as infrastructure improvements or equipment purchases. It also offers wealth management services, which include estate planning, investment, and farm management and brokerage services for individuals; employee benefit services for businesses; and farm management and brokerage services. In addition, the company provides property and casualty, senior insurance products, and group medical insurance for businesses; and personal lines insurance to individuals. The company was formerly known as First Mid-Illinois Bancshares, Inc. and changed its name to First Mid Bancshares, Inc. in April 2019. First Mid Bancshares, Inc. was founded in 1865 and is headquartered in Mattoon, Illinois.

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.