Allison Transmission Holdings (ALSN) AI Stock Analysis

• Market Cap: $7.83B
• Dividend Yield: 1.16%
• Average Volume (3M): 675.98K
• Price to Earnings (P/E): 10.8
• Beta (1Y): 0.94
• Revenue Growth: 3.86%
• EPS Growth: 16.02%
• Country: US
• Employees: 4,000
• Sector: Consumer Cyclical
• Sector Strength: 56
• Industry: Auto - Parts
• EPS (TTM): 2.23
• Shares Outstanding: 84,254,780
• 10 Day Avg. Volume: 968,273
• 30 Day Avg. Volume: 675,978
• PEG Ratio: 0.22
• Price to Book (P/B): 4.57
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 8.15
• Enterprise Value/Market Cap: 0.80
• Enterprise Value/Revenue: 0.49
• Enterprise Value/Gross Profit: 4.07
• Enterprise Value/Ebitda: 1.38
• 1Y Price Target: $98.29
• Price Target Upside: 5.82% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 7

• Rating: 80 Outperform
• Price Target: $114.00 ▲(22.74%Upside)

Allison Transmission Holdings receives a strong overall score driven by solid financial performance and positive earnings call guidance. The technical indicators suggest mixed momentum, and the valuation is attractive. The company's strategic acquisitions and leadership changes further bolster its growth prospects, but potential risks from declining sales and high leverage warrant caution.

Positive Factors

Acquisition Strategy

Allison announced an agreement to acquire Dana’s off-highway business, extending its reach into construction, forestry, agriculture, and industrial markets, while nearly doubling potential revenue.

Cost Efficiency

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

Geographic Diversification

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

Negative Factors

Margin Concerns

There is market hesitation as Allison acquires a business with a focus on 'cost-out' rather than 'pricing,' which has been a hallmark of Allison.

Market Reaction

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

Outlook and Expectations

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

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 demonstrates strong profitability with solid margins and efficient cash flow management. Despite a slight revenue decline, the company's financial health remains commendable with high returns and manageable leverage.

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.20B	3.23B	3.04B	2.77B	2.40B	2.08B
Gross Profit	1.54B	1.53B	1.47B	1.30B	1.15B	998.00M
EBITDA	1.14B	1.12B	1.08B	948.00M	828.00M	696.00M
Net Income	754.00M	731.00M	673.00M	531.00M	442.00M	299.00M
Balance Sheet
Total Assets	5.37B	5.34B	5.03B	4.67B	4.46B	4.48B
Cash, Cash Equivalents and Short-Term Investments	753.00M	781.00M	562.00M	232.00M	127.00M	310.00M
Total Debt	2.40B	2.41B	2.52B	2.51B	2.51B	2.51B
Total Liabilities	3.70B	3.69B	3.79B	3.80B	3.82B	3.72B
Stockholders Equity	1.67B	1.65B	1.23B	874.00M	634.00M	756.00M
Cash Flow
Free Cash Flow	651.00M	658.00M	659.00M	490.00M	460.00M	446.00M
Operating Cash Flow	809.00M	801.00M	784.00M	657.00M	635.00M	561.00M
Investing Cash Flow	-161.00M	-147.00M	-129.00M	-183.00M	-212.00M	-111.00M
Financing Cash Flow	-447.00M	-427.00M	-332.00M	-367.00M	-604.00M	-335.00M

Allison Transmission Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 92.88
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• 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 92.88 is below the 20-day moving average (MA) of 99.15, below the 50-day MA of 97.79, and below the 200-day MA of 102.52, indicating a bearish trend. The MACD of -2.18 indicates Positive momentum. The RSI at 35.61 is Neutral, neither overbought nor oversold. The STOCH value of 22.55 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
VC	83 Outperform	$2.49B	8.56	25.15%	―	-1.35%	-39.06%
ALSN	80 Outperform	$7.83B	10.81	50.15%	1.16%	3.86%	16.02%
BWA	76 Outperform	$7.28B	26.89	5.38%	1.31%	-8.22%	-52.61%
LEA	75 Outperform	$4.96B	10.84	10.00%	3.33%	-3.15%	-6.70%
ALV	75 Outperform	$8.55B	12.89	28.71%	2.50%	-2.29%	35.00%
DAN	61 Neutral	$2.43B	―	-2.40%	2.34%	-7.00%	-366.59%
Sector *	56 Neutral	HK$24.19B	4.02	-1.57%	11.14%	0.06%	-64.76%

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.

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.