Allison Transmission Holdings (ALSN) AI Stock Analysis

• Market Cap: $7.58B
• Dividend Yield: 1.15%
• Average Volume (3M): 933.67K
• Price to Earnings (P/E): 10.7
• Beta (1Y): 0.93
• Revenue Growth: 6.26%
• EPS Growth: 12.62%
• Country: US
• Employees: 4,000
• Sector: Consumer Cyclical
• Sector Strength: 62
• Industry: Auto - Parts
• EPS (TTM): 8.31
• Shares Outstanding: 85,518,295
• 10 Day Avg. Volume: 1,009,006
• 30 Day Avg. Volume: 933,668
• PEG Ratio: 0.85
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.56
• Price to Cash Flow (P/CF): 9.80
• P/FCF Ratio: 9.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $100.40
• Price Target Upside: 13.04% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

Allison Transmission Holdings demonstrates robust financial health with strong profitability and cash flow generation, complemented by positive corporate events. However, technical analysis shows weak momentum, and valuation metrics are stable but not particularly compelling. The earnings call provided optimistic guidance but acknowledged some operational challenges.

Positive Factors

Business Momentum

3Q results exceeded high expectations, indicating strong business momentum.

Defense Sales

Defense sales significantly exceeded estimates, reflecting strong performance in a capacity-constrained environment.

Negative Factors

Commodity Costs

Allison expects to see some cost pressure from raw materials and purchased components.

Market Expectations

The forecast for North America On-Highway revenue growth is +1% versus the consensus of +5.5%, driven by softer Medium Duty performance.

Market Outlook

A negative stock reaction is expected due to the lower than anticipated 2025 outlook despite the 4Q24 EPS beat.

Allison Transmission Holdings Business Overview & Revenue Model

Company Description

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells commercial and defense fully-automatic transmissions for medium-and heavy-duty commercial vehicles, and medium-and heavy-tactical U.S. defense vehicles worldwide. It offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. The company markets its transmissions under the Allison Transmission brand name; and remanufactured transmissions under the ReTran brand name. It also sells branded replacement parts, support equipment, aluminum die cast components, and other products necessary to service the installed base of vehicles utilizing its transmissions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. The company serves customers through an independent network of approximately 1,400 independent distributor and dealer locations. The company was formerly known as Clutch Holdings, Inc. Allison Transmission Holdings, Inc. was founded in 1915 and is headquartered in Indianapolis, Indiana.

How the Company Makes Money

Allison Transmission generates revenue primarily through the sale of its automatic transmissions and propulsion systems to original equipment manufacturers (OEMs), distributors, and end-users worldwide. The company's key revenue streams include sales to the commercial vehicle market, off-highway applications, and the defense sector. It also benefits from aftermarket sales, including parts and service support, which provide a stable revenue source. Strategic partnerships with vehicle manufacturers and ongoing investment in research and development for new technologies, such as electric and hybrid propulsion solutions, contribute significantly to its earnings by positioning the company to meet evolving market demands.

Allison Transmission Holdings Financial Statement Overview

Summary

Allison Transmission Holdings demonstrates a robust financial position with strong revenue growth, profitability, and cash flow generation. The company has effective leverage management and a solid equity base, though attention may be needed on total liabilities.

Income Statement

Allison Transmission Holdings shows strong financial performance with consistent revenue growth, as evidenced by a 6.26% increase in TTM revenue compared to the previous year. The company maintains impressive profitability with a high gross profit margin of 47.20% and a net profit margin of 22.66% in the TTM. EBIT and EBITDA margins are robust at 30.77% and 34.47%, respectively, indicating efficient operations and cost management.

Balance Sheet

The balance sheet reflects a solid equity position with an equity ratio of 30.95%. The debt-to-equity ratio is manageable at 1.45, which suggests a reasonable level of leverage. Return on Equity (ROE) is strong at 44.27%, highlighting effective use of equity to generate profits. However, the company's total liabilities are substantial, which could pose risks if not managed carefully.

Cash Flow

Cash flow performance is excellent, with a significant free cash flow growth rate of 11.23% in the TTM. The operating cash flow to net income ratio of 1.10 indicates that the company efficiently converts net income into cash. The free cash flow to net income ratio of 1.00 further supports the company's strong cash-generating capability, providing flexibility for investments and debt repayments.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
3.23B	3.04B	2.77B	2.40B	2.08B
	Gross Profit
1.53B	1.47B	1.30B	1.15B	998.00M
	EBIT
992.00M	919.00M	608.00M	669.00M	382.00M
	EBITDA
1.11B	1.08B	948.00M	828.00M	696.00M
	Net Income Common Stockholders
731.00M	673.00M	531.00M	442.00M	299.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
781.00M	562.00M	232.00M	127.00M	310.00M
	Total Assets
5.34B	5.03B	4.67B	4.46B	4.48B
	Total Debt
2.41B	2.52B	2.51B	2.51B	2.51B
	Net Debt
1.63B	1.97B	2.27B	2.38B	2.20B
	Total Liabilities
3.69B	3.79B	3.80B	3.82B	3.72B
	Stockholders Equity
1.65B	1.23B	874.00M	634.00M	756.00M
Cash Flow		Free Cash Flow
801.00M	659.00M	490.00M	460.00M	446.00M
	Operating Cash Flow
801.00M	784.00M	657.00M	635.00M	561.00M
	Investing Cash Flow
-147.00M	-129.00M	-183.00M	-212.00M	-111.00M
	Financing Cash Flow
-427.00M	-332.00M	-367.00M	-604.00M	-335.00M

Allison Transmission Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 88.82
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALSN, the sentiment is Negative. The current price of 88.82 is below the 20-day moving average (MA) of 94.57, below the 50-day MA of 99.76, and below the 200-day MA of 99.02, indicating a bearish trend. The MACD of -1.45 indicates Negative momentum. The RSI at 44.90 is Neutral, neither overbought nor oversold. The STOCH value of 27.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALSN.

Allison Transmission Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ALSN	80 Outperform	$7.58B	10.67	50.69%	1.15%	6.26%	12.62%
VC	70 Outperform	$1.82B	6.94	24.17%	―	-2.23%	-42.94%
ALV	66 Neutral	$6.45B	10.36	26.69%	3.46%	-0.80%	39.95%
LEA	64 Neutral	$4.09B	8.51	10.81%	4.04%	-0.70%	-7.27%
BWA	62 Neutral	$5.91B	17.88	6.46%	1.71%	-11.10%	-46.32%
Sector *	59 Neutral	$11.40B	10.19	-0.83%	4.03%	1.27%	-16.17%
DAN	57 Neutral	$1.55B	―	-3.92%	3.76%	-2.57%	-248.28%

Allison Transmission Holdings Corporate Events

Allison Transmission Appoints New CFO Scott Mell

On April 10, 2025, Allison Transmission Holdings announced the appointment of Scott A. Mell as the new Chief Financial Officer and Treasurer, effective April 14, 2025. Scott Mell, who brings nearly 30 years of financial and operational leadership experience, will succeed G. Frederick Bohley, who will continue as Chief Operating Officer. Mell’s extensive international experience and strategic leadership are expected to drive growth and innovation at Allison Transmission, enhancing shareholder value and guiding the company through its next phase of development.

Spark’s Take on ALSN Stock

According to Spark, TipRanks’ AI Analyst, ALSN is a Neutral.

Allison Transmission Holdings’ robust financial performance and strategic shareholder returns are key strengths. However, technical analysis indicates weak momentum, and valuation metrics are stable but not particularly attractive. Earnings call revealed strong sales but also highlighted challenges, including EBITDA decline and flat growth outside North America.

To see Spark’s full report on ALSN stock, click here.

Allison Transmission Increases Stock Repurchase and Dividend

On February 19, 2025, Richard P. Lavin, a board member of Allison Transmission Holdings, announced he would not seek re-election due to health reasons, with no disagreements cited with the company. On February 20, 2025, Allison Transmission announced an increase in its stock repurchase program by $1 billion, bringing the total authorization to $5 billion, and an 8% increase in its quarterly dividend, reflecting a robust financial strategy and commitment to shareholder returns. The company’s annual stockholders meeting is scheduled for May 7, 2025, with a record date of March 10, 2025.