Allison Transmission Holdings (ALSN) AI Stock Analysis

• Market Cap: $7.55B
• Dividend Yield: 1.21%
• Average Volume (3M): 768.76K
• Price to Earnings (P/E): 10.4
• Beta (1Y): 0.96
• Revenue Growth: 3.86%
• EPS Growth: 16.02%
• Country: US
• Employees: 4,000
• Sector: Consumer Cyclical
• Sector Strength: 65
• Industry: Auto - Parts
• EPS (TTM): 2.23
• Shares Outstanding: 84,254,780
• 10 Day Avg. Volume: 652,345
• 30 Day Avg. Volume: 768,759
• PEG Ratio: 2.55
• Price to Book (P/B): 4.68
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 11.58
• Enterprise Value/Market Cap: 1.22
• Enterprise Value/Revenue: 0.72
• Enterprise Value/Gross Profit: 5.97
• Enterprise Value/Ebitda: 2.03
• 1Y Price Target: $95.67
• Price Target Upside: 7.59% Upside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 6

• Rating: 73 Outperform
• Price Target: $99.00 ▲(11.34%Upside)

Allison Transmission Holdings has a commendable financial performance with strong profitability and cash flow, which is the primary driver of its stock score. Technical indicators show bearish momentum, impacting the overall score negatively. The stock appears undervalued, offering a potential opportunity for investors. Strategic acquisitions and partnerships are positive factors, but challenges in parts business and sales decline need attention.

Positive Factors

Acquisition and Expansion

The acquisition of Dana's Off-Highway business should help expand ALSN's product portfolio with complementary propulsion categories and explore new markets and geographies.

Geographic Diversification

The deal is expected to diversify ALSN's geographic exposure, reducing reliance on the Americas while increasing presence in Europe and India.

Synergies and Efficiency

ALSN expects to achieve $120M in annual run-rate synergies from the acquisition.

Negative Factors

Financial Outlook

Allison's initial 2025 outlook (EBITDA) is 4% below consensus expectations, as 400bps of pricing gains are offset by a 300bps decline in volume.

Input Costs

Analyst reiterates an underperform rating due to concerns on cycle-to-cycle margin progression and the potential impact of input costs.

Market Reaction

Allison’s shares have fallen 3% since the deal was announced, highlighting difficulty in replicating legacy Allison’s margin in adjacent markets.

Allison Transmission Holdings Business Overview & Revenue Model

Company Description

Allison Transmission Holdings, Inc. is a leading designer and manufacturer of vehicle propulsion solutions. The company primarily operates in the automotive sector, specializing in the production of automatic transmissions and hybrid propulsion systems for commercial vehicles. Allison Transmission caters to a wide range of customers, including truck manufacturers, governments, and defense contractors, providing high-performance and reliable solutions that enhance vehicle efficiency and durability.

How the Company Makes Money

Allison Transmission makes money primarily through the sale of its automatic transmissions and propulsion systems. The company's revenue streams include OEM (original equipment manufacturer) sales, aftermarket parts and services, and licensing royalties. By supplying transmissions to various commercial vehicle manufacturers, as well as military and specialty vehicle producers, Allison Transmission secures substantial OEM contracts. Additionally, the company generates revenue from the aftermarket segment by providing replacement parts and maintenance services to ensure the longevity and performance of their products. Strategic partnerships and long-term contracts with major vehicle manufacturers and government entities also play a crucial role in sustaining its financial performance.

Allison Transmission Holdings Financial Statement Overview

Summary

Allison Transmission Holdings presents a solid financial position with high profitability and efficient cash flow management. While there is a slight dip in revenue, the company maintains strong margins and returns, supported by solid operational cash flow. The balance sheet shows moderate leverage that could pose future risks if not managed, but overall, the financial health is commendable.

Income Statement

The company demonstrates strong profitability with a Gross Profit Margin of 48.1% and a Net Profit Margin of 23.5% for TTM. EBIT and EBITDA margins are robust at 31.4% and 34.6% respectively. However, a slight decline in revenue from the previous annual report by -0.7% indicates a potential challenge in maintaining top-line growth.

Balance Sheet

The Debt-to-Equity Ratio is reasonably high at 1.44, which suggests moderate financial leverage. Return on Equity is strong at 45.3%, indicating efficient use of equity capital. The Equity Ratio remains stable at 31.0%, reflecting a solid capital structure, although the debt level warrants monitoring.

Cash Flow

Operating Cash Flow to Net Income Ratio is healthy at 1.07, indicating strong cash conversion. The Free Cash Flow to Net Income Ratio of 0.90 supports liquidity and operational efficiency. The Free Cash Flow Growth Rate shows a positive trend at 2.9% over the annual period, which is a positive indicator for cash generation.

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
EBITDA	1.12B	1.08B	948.00M	828.00M	696.00M
Net Income	731.00M	673.00M	531.00M	442.00M	299.00M
Balance Sheet
Total Assets	5.34B	5.03B	4.67B	4.46B	4.48B
Cash, Cash Equivalents and Short-Term Investments	781.00M	562.00M	232.00M	127.00M	310.00M
Total Debt	2.41B	2.52B	2.51B	2.51B	2.51B
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	658.00M	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: 88.92
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 88.92 is below the 20-day moving average (MA) of 93.41, below the 50-day MA of 98.60, and below the 200-day MA of 102.90, indicating a bearish trend. The MACD of -2.20 indicates Positive momentum. The RSI at 30.52 is Neutral, neither overbought nor oversold. The STOCH value of 7.14 is Positive, 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
VC	80 Outperform	$3.01B	10.28	25.15%	―	-1.35%	-39.06%
ALV	79 Outperform	$9.03B	13.45	28.71%	2.40%	-2.29%	35.00%
BWA	76 Outperform	$7.69B	28.13	5.38%	1.26%	-8.23%	-52.61%
LEA	74 Outperform	$5.63B	12.34	10.00%	2.89%	-3.15%	-6.70%
ALSN	73 Outperform	$7.55B	10.36	50.15%	1.21%	3.86%	16.02%
DAN	61 Neutral	$2.47B	―	-2.40%	2.36%	-7.00%	-366.59%
Sector *	56 Neutral	HK$25.22B	4.10	-2.03%	6.15%	-0.31%	-67.64%

Allison Transmission Holdings Corporate Events

Allison Transmission Acquires Dana’s Off-Highway Business

On June 11, 2025, Allison Transmission Holdings entered into a Stock Purchase Agreement with Dana Incorporated to acquire Dana’s off-highway business for $2.732 billion. The transaction is expected to close in late 2025, pending regulatory approvals, and is not subject to financing conditions. This acquisition is anticipated to enhance Allison’s market position in the off-highway sector, although it involves customary risks and uncertainties, including regulatory reviews and integration challenges.

The most recent analyst rating on (ALSN) stock is a Hold with a $80.00 price target. To see the full list of analyst forecasts on Allison Transmission Holdings stock, see the ALSN Stock Forecast page.

Allison Transmission Acquires Dana’s Off-Highway Business

On June 11, 2025, Allison Transmission Holdings announced a definitive agreement to acquire Dana Incorporated’s off-highway business for approximately $2.7 billion. This strategic acquisition aims to enhance Allison’s global powertrain capabilities and expand its market presence in emerging markets, offering a broader range of solutions to customers worldwide. The acquisition is expected to be immediately accretive to Allison’s earnings per share and generate significant synergies, with completion anticipated in the fourth quarter of 2025, pending regulatory approvals.

The most recent analyst rating on (ALSN) stock is a Hold with a $80.00 price target. To see the full list of analyst forecasts on Allison Transmission Holdings stock, see the ALSN Stock Forecast page.

Allison Transmission Holds Annual Stockholder Meeting

On May 7, 2025, Allison Transmission Holdings held its annual meeting where stockholders elected nine directors for one-year terms, ratified the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2025, and approved several proposals including the Exculpation Amendment and advisory votes on executive compensation. The board decided to hold future advisory votes on executive compensation annually until at least 2031, reflecting a commitment to regular shareholder engagement on executive pay matters.