No-moat Ally Financial ALLY reported third-quarter earnings that were largely in line with our expectations, as deteriorating consumer credit and higher interest rates continue to pressure results. Net revenue decreased 2% from last year and 5% from last quarter to $1.97 billion. Earnings per share were flat at $0.88, which translates to a return on equity of 9.9%. However, this includes a tax benefit of $94 million, or $0.31 per share, during the quarter. As we incorporate these results, we do not plan to materially alter our $39 fair value estimate. We see the shares as undervalued on a full-cycle basis. Net interest margin compression continues to be an issue for Ally, with the bank's NIM falling to 3.26% from 3.83% last year and 3.41% last quarter. The lower NIM caused net financing revenue to fall 10.8% from last year to $1.5 billion, despite the loan book growing 6.3% over the same period. Rising interest rates are causing Ally's funding costs to rise faster than its asset yield.