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Allison Transmission Holdings
(NYSE:ALSN)
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Rating:66Neutral
Price Target:
$126.00
â–²(2.99% Upside)
Action:Reiterated
Date:08/04/26
The score is driven primarily by solid revenue growth and strong free cash flow, tempered by rising leverage and meaningful recent margin compression. The latest earnings call was constructive with raised guidance and strong operational highlights, while technical signals remain neutral and valuation appears reasonable but not compelling.
Positive Factors
Sustained revenue growth
Consistent TTM top-line expansion (+20.6%) reflects widening product adoption and scale from the Off-Highway acquisition and core transmission demand. Durable OEM relationships and a larger installed base support recurring aftermarket revenue, making revenue growth less cyclical over a multi‑quarter horizon.
Negative Factors
Legacy margin compression
Sharp raw material headwinds have materially reduced gross and net margins versus prior years. With passthrough pricing lagging 6–12 months, margin volatility can persist, eroding earnings quality and cash conversion until pricing or mix improvements fully offset input inflation.
Read all positive and negative factors
Positive Factors
Negative Factors
Sustained revenue growth
Consistent TTM top-line expansion (+20.6%) reflects widening product adoption and scale from the Off-Highway acquisition and core transmission demand. Durable OEM relationships and a larger installed base support recurring aftermarket revenue, making revenue growth less cyclical over a multi‑quarter horizon.
Read all positive factors
Allison Transmission Holdings (ALSN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.50B
Dividend Yield0.98%
Average Volume (3M)1.30M
Price to Earnings (P/E)17.7
Beta (1Y)0.94
Revenue Growth13.99%
EPS Growth-25.70%
CountryUS
Employees4,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)6.34
Shares Outstanding82,935,980
10 Day Avg. Volume747,972
30 Day Avg. Volume1,295,258
Financial Highlights & Ratios
PEG Ratio-1.13
Price to Book (P/B)4.40
Price to Sales (P/S)2.73
P/FCF Ratio12.67
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$137.33Price Target Upside12.26% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)8.53
Revenue Forecast (FY)$5.86B
Allison Transmission Holdings Business Overview & Revenue Model
Company Description
Allison Transmission Holdings, Inc. (ALSN), along with its affiliates, specializes in the global development, manufacturing, and sale of fully-automatic transmissions. These robust systems are engineered for both medium and heavy-duty commercial v...
How the Company Makes Money
Allison generates revenue primarily by selling new propulsion products and by supporting those products over their operating lives.
1) New transmissions and propulsion systems (OEM channel): A major portion of revenue comes from selling fully aut...
Allison Transmission Holdings Earnings Call Summary
Earnings Call Date:Aug 03, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Positive
The call conveyed strong positive financial and operational momentum driven by the Off-Highway acquisition, record transmission revenues, sizeable defense contract wins, robust adjusted EBITDA and record free cash flow, plus an upward revision to full-year guidance. Key short-term negatives include material-cost-driven margin pressure in the legacy transmission business, sizeable one-time acquisition and integration expenses, seasonal softness in Off-Highway (Q3), and regional weakness in the Americas and agriculture end markets. Management provided a clear $120M synergy plan and a multi-year realization timeline, but noted limited impact from those synergies on 2026 guidance.Positive Updates
Huge Consolidated Revenue Increase
Second quarter net sales of $1.566 billion, up 92% year-over-year, driven by the acquisition of the Allison Off-Highway business and a 6% year-over-year increase in the Allison Transmission business unit.
Negative Updates
Material Cost Inflation Compressing Legacy Margins
Legacy transmission business experienced margin compression driven primarily by material cost headwinds (mid-teens year-over-year impact) with aluminum rising nearly 25% quarter-over-quarter; passthrough mechanisms exist but operate on a 6- to 12-month lag.
Read all updates
Q2-2026 Updates
Positive
Negative
Huge Consolidated Revenue Increase
Second quarter net sales of $1.566 billion, up 92% year-over-year, driven by the acquisition of the Allison Off-Highway business and a 6% year-over-year increase in the Allison Transmission business unit.
Read all positive updates
Company Guidance
Allison raised its full‑year 2026 guidance to consolidated net sales of $5.8–$6.0 billion, consolidated net income of $600–$700 million (which includes roughly $140 million of one‑time pretax separation/integration and restructuring costs, including about $75 million related to stepped‑up inventory), and consolidated adjusted EBITDA of $1.465–$1.575 billion (midpoint implying ~26% adjusted EBITDA margin); the company expects consolidated net cash provided by operating activities of $1.025–$1.125 billion (which includes ~$55 million of one‑time acquisition‑related cash outlays), consolidated capital expenditures of $260–$280 million (including ~$30 million of one‑time separation/integration spend), and consolidated adjusted free cash flow of $745–$865 million; management noted no material synergies are baked into 2026 EBITDA, reiterated a $120 million annual run‑rate synergy target (60% procurement/logistics, 20% operations/footprint, 20% org efficiency) with ~40% realization by end‑2027, another 40% by end‑2028 and full realization by end‑2029, and emphasized near‑term priorities to fund growth, reduce debt toward a ~2x leverage target (Q2 revolver repayment of $150 million), and return excess cash via dividends ($0.29/quarter) and buybacks ($46 million repurchased in Q2).Allison Transmission Holdings Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
58
Neutral
Cash Flow
67
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.70B | 3.01B | 3.23B | 3.04B | 2.77B | 2.40B |
| Gross Profit | 1.46B | 1.46B | 1.53B | 1.47B | 1.30B | 1.15B |
| EBITDA | 1.09B | 1.03B | 1.11B | 1.09B | 918.00M | 838.00M |
| Net Income | 529.00M | 623.00M | 731.00M | 673.00M | 531.00M | 442.00M |
Balance Sheet | ||||||
| Total Assets | 8.72B | 6.08B | 5.34B | 5.03B | 4.67B | 4.46B |
| Cash, Cash Equivalents and Short-Term Investments | 399.00M | 1.50B | 781.00M | 555.00M | 232.00M | 127.00M |
| Total Debt | 4.11B | 2.92B | 2.42B | 2.52B | 2.52B | 2.53B |
| Total Liabilities | 6.74B | 4.21B | 3.69B | 3.79B | 3.80B | 3.82B |
| Stockholders Equity | 1.98B | 1.87B | 1.65B | 1.23B | 874.00M | 634.00M |
Cash Flow | ||||||
| Free Cash Flow | 834.00M | 649.00M | 658.00M | 659.00M | 490.00M | 460.00M |
| Operating Cash Flow | 1.09B | 824.00M | 801.00M | 784.00M | 657.00M | 635.00M |
| Investing Cash Flow | -5.36B | -184.00M | -147.00M | -129.00M | -183.00M | -212.00M |
| Financing Cash Flow | 2.71B | 69.00M | -427.00M | -332.00M | -367.00M | -604.00M |
Allison Transmission Holdings Technical Analysis
Positive
122.34
Price Trends
116.78
Positive
119.14
Negative
109.56
Positive
Market Momentum
0.46
Negative
51.21
Neutral
52.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALSN, the sentiment is Positive. The current price of 122.34 is above the 20-day moving average (MA) of 116.90, above the 50-day MA of 116.78, and above the 200-day MA of 109.56, indicating a bullish trend. The MACD of 0.46 indicates Negative momentum. The RSI at 51.21 is Neutral, neither overbought nor oversold. The STOCH value of 52.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALSN.
Allison Transmission Holdings Risk Analysis
Allison Transmission Holdings disclosed 31 risk factors in its most recent earnings report. Allison Transmission Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Allison Transmission Holdings Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $9.02B | 14.44 | 25.10% | 2.94% | 5.89% | -7.00% | |
67 Neutral | $6.54B | 12.13 | 9.19% | 2.14% | 3.55% | 25.67% | |
66 Neutral | $9.50B | 17.73 | 27.88% | 0.92% | 13.99% | -25.70% | |
64 Neutral | $13.07B | 37.06 | 7.37% | 1.06% | 2.36% | 34.03% | |
63 Neutral | $2.79B | 18.67 | 9.71% | 1.23% | -1.13% | -47.30% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
55 Neutral | $2.90B | -19.80 | -12.67% | 1.63% | -23.37% | -131.29% |
* Consumer Cyclical Sector Average
ALSN
Allison Transmission Holdings
116.24
29.82
34.50%
ALV
Autoliv
120.57
10.77
9.80%
BWA
BorgWarner
65.80
28.10
74.55%
DAN
Dana Incorporated
27.32
10.05
58.21%
LEA
Lear
119.08
25.51
27.26%
VC
Visteon
103.20
-9.13
-8.13%
Allison Transmission Holdings Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Allison Transmission Lowers Term Loan Interest Costs
Positive
Jun 16, 2026
On June 11, 2026, Allison Transmission Holdings, Inc. completed an opportunistic repricing of its existing $508 million term loan due March 13, 2031 through an amendment to its credit agreement. The company announced the transaction on June 16, 20...
Executive/Board ChangesShareholder Meetings
Allison Transmission Highlights Governance Stability and Executive Retention
Positive
May 8, 2026
On May 6, 2026, Allison Transmission Holdings’ board Compensation Committee elevated Chief Legal Officer and Assistant Secretary Eric C. Scroggins from Tier 1/2 to Tier 1 status in its Executive Change in Control and Severance Plan, enhancin...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.