Allison Transmission (ALSN)
NYSE:ALSN
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Allison Transmission Holdings
(NYSE:ALSN)
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Rating:64Neutral
Price Target:
$118.00
▼(-8.17% Downside)
Action:Reiterated
Date:05/09/26
The score is driven primarily by solid core profitability and improving revenue trends, tempered by meaningfully higher leverage and weaker recent cash conversion. Technicals are constructive over the longer term but soft near term, while valuation is only modestly supported due to a ~22 P/E and low yield. The latest call was broadly constructive on guidance and integration progress, but leverage and near-term cash flow headwinds remain key risks.
Positive Factors
Revenue Re-acceleration & Strong Margins
Sustained top-line momentum with high gross and operating margins indicates durable demand and efficient manufacturing. This combination supports long-term cash generation, funds reinvestment, and resilience through cycles as margins provide a buffer versus cyclical OEM volumes.
Negative Factors
Elevated Leverage
Significantly higher debt increases financial rigidity and interest cost sensitivity, reducing flexibility for capital returns or opportunistic investment. In a cyclical auto‑parts industry, elevated leverage amplifies downside risk if volumes or cash conversion weaken.
Read all positive and negative factors
Positive Factors
Negative Factors
Revenue Re-acceleration & Strong Margins
Sustained top-line momentum with high gross and operating margins indicates durable demand and efficient manufacturing. This combination supports long-term cash generation, funds reinvestment, and resilience through cycles as margins provide a buffer versus cyclical OEM volumes.
Read all positive factors
Allison Transmission Holdings (ALSN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.42B
Dividend Yield1.07%
Average Volume (3M)934.25K
Price to Earnings (P/E)17.6
Beta (1Y)0.94
Revenue Growth13.99%
EPS Growth-25.70%
CountryUS
Employees4,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)6.46
Shares Outstanding82,935,980
10 Day Avg. Volume1,039,023
30 Day Avg. Volume934,255
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 Cap1.42
Enterprise Value/Revenue3.66
Enterprise Value/Gross Profit8.98
Enterprise Value/Ebitda13.47
Forecast
1Y Price Target
$132.00Price Target Upside2.72% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)8.88
Revenue Forecast (FY)$5.80B
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 ve...
How the Company Makes Money
Allison primarily makes money by selling transmissions and propulsion solutions and by monetizing the long-lived installed base of Allison-equipped vehicles through aftermarket support.
Key revenue streams typically include:
1) OEM (original equi...
Allison Transmission Holdings Earnings Call Summary
Earnings Call Date:May 04, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Neutral
The call presents a mixed but broadly constructive outlook: adjusted (non-GAAP) profitability metrics were strong (adjusted EBITDA +22% and adjusted EPS +6%), the Off Highway acquisition is generating meaningful revenue and is expected to be accretive, and integration/synergy progress is on track toward a $120 million run-rate. Offsetting these positives are sizable one-time acquisition-related GAAP hits (~$76M inventory step-up, ~$22M amortization, ~$17M integration), near-term free cash flow seasonality, and elevated net leverage (~$4B) amid geopolitical and regulatory uncertainty that could pressure end markets (notably medium-duty). Management reaffirmed full-year guidance and emphasized confidence in long-term margin and synergy targets but acknowledged short-term headwinds.Positive Updates
Adjusted EBITDA Growth and Margin
Adjusted EBITDA of $362 million in Q1, up 22% year-over-year, with an adjusted EBITDA margin of 26% and a target range of 27%–29% over the next few years.
Negative Updates
GAAP Net Income and One-Time Acquisition Charges
Consolidated GAAP net income decreased to $112 million in Q1, impacted by approximately $76 million of purchase-price accounting items (stepped-up basis in inventory), an additional $22 million of intangible asset amortization, and ~$17 million of one-time acquisition-related integration expenses.
Read all updates
Q1-2026 Updates
Positive
Negative
Adjusted EBITDA Growth and Margin
Adjusted EBITDA of $362 million in Q1, up 22% year-over-year, with an adjusted EBITDA margin of 26% and a target range of 27%–29% over the next few years.
Read all positive updates
Company Guidance
Allison reaffirmed its full‑year 2026 guidance: consolidated net sales $5.575–$5.925 billion (Allison Transmission $3.025–$3.175 billion; Allison Off Highway $2.55–$2.75 billion), consolidated net income $600–$750 million (which includes more than $100 million of one‑time pretax separation/integration costs), and consolidated adjusted EBITDA $1.365–$1.515 billion (midpoint implying ~25% adjusted EBITDA margin; company target longer‑term adjusted EBITDA margin 27–29%). They expect consolidated net cash provided by operating activities of $970 million–$1.1 billion (including ~ $55 million of one‑time acquisition‑related cash outlays), consolidated capital expenditures $295–$315 million (including roughly $45 million of one‑time separation/integration capex), and consolidated adjusted free cash flow of $655 million to an upper amount that was inaudible on the call; the acquisition is expected to be accretive to full‑year EPS. Quarterly/balance‑sheet context: Q1 adjusted diluted EPS was $2.57 and Q1 adjusted EBITDA was $362 million (26% margin); cash on hand $311 million, ~$845 million available on the revolver, net debt just under $4 billion (pro forma leverage below 3x) with a near‑term net leverage target of ~2x.Allison Transmission Holdings Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
58
Neutral
Cash Flow
65
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.65B | 3.01B | 3.23B | 3.04B | 2.77B | 2.40B |
| Gross Profit | 1.49B | 1.46B | 1.53B | 1.47B | 1.30B | 1.15B |
| EBITDA | 993.00M | 1.03B | 1.11B | 1.09B | 918.00M | 838.00M |
| Net Income | 543.00M | 623.00M | 731.00M | 673.00M | 531.00M | 442.00M |
Balance Sheet | ||||||
| Total Assets | 8.75B | 6.08B | 5.34B | 5.03B | 4.67B | 4.46B |
| Cash, Cash Equivalents and Short-Term Investments | 311.00M | 1.50B | 781.00M | 555.00M | 232.00M | 127.00M |
| Total Debt | 4.27B | 2.92B | 2.42B | 2.51B | 2.52B | 2.53B |
| Total Liabilities | 6.85B | 4.21B | 3.69B | 3.79B | 3.80B | 3.82B |
| Stockholders Equity | 1.90B | 1.87B | 1.65B | 1.23B | 874.00M | 634.00M |
Cash Flow | ||||||
| Free Cash Flow | 660.00M | 649.00M | 658.00M | 659.00M | 490.00M | 460.00M |
| Operating Cash Flow | 805.00M | 824.00M | 801.00M | 784.00M | 657.00M | 635.00M |
| Investing Cash Flow | -2.77B | -184.00M | -147.00M | -129.00M | -183.00M | -212.00M |
| Financing Cash Flow | 1.53B | 69.00M | -427.00M | -332.00M | -367.00M | -604.00M |
Allison Transmission Holdings Technical Analysis
Neutral
128.50
Price Trends
121.54
Negative
117.49
Negative
102.41
Positive
Market Momentum
-3.54
Positive
40.15
Neutral
50.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALSN, the sentiment is Neutral. The current price of 128.5 is above the 20-day moving average (MA) of 118.44, above the 50-day MA of 121.54, and above the 200-day MA of 102.41, indicating a neutral trend. The MACD of -3.54 indicates Positive momentum. The RSI at 40.15 is Neutral, neither overbought nor oversold. The STOCH value of 50.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | $7.36B | 13.83 | 10.41% | 2.63% | 2.86% | 17.30% | |
74 Outperform | $3.16B | 19.20 | 11.08% | 0.57% | -2.04% | -43.19% | |
72 Outperform | $9.52B | 13.39 | 27.78% | 2.60% | 6.14% | 7.30% | |
71 Outperform | $14.73B | 40.73 | 6.34% | 1.24% | 2.36% | 34.03% | |
64 Neutral | $9.42B | 17.57 | 29.49% | 1.07% | 13.99% | -25.70% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
53 Neutral | $3.83B | ― | -12.67% | 1.70% | -23.37% | -131.29% |
* Consumer Cyclical Sector Average
ALSN
Allison Transmission Holdings
113.53
12.67
12.57%
ALV
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127.12
28.79
29.28%
BWA
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123.96%
DAN
Dana Incorporated
35.41
19.18
118.23%
LEA
Lear
143.12
58.18
68.49%
VC
Visteon
118.29
36.55
44.71%
Allison Transmission Holdings Corporate Events
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.