Allison Transmission Holdings (ALSN) AI Stock Analysis

• Market Cap: $10.38B
• Dividend Yield: 1.07%
• Average Volume (3M): 837.23K
• Price to Earnings (P/E): 17.1
• Beta (1Y): 0.94
• Revenue Growth: -4.21%
• EPS Growth: -0.45%
• Country: US
• Employees: 4,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Parts
• EPS (TTM): 1.18
• Shares Outstanding: 82,805,595
• 10 Day Avg. Volume: 957,621
• 30 Day Avg. Volume: 837,230
• PEG Ratio: -1.13
• Price to Book (P/B): 4.40
• Price to Sales (P/S): 2.73
• P/FCF Ratio: 12.67
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 3.94
• Enterprise Value/Gross Profit: 8.11
• Enterprise Value/Ebitda: 11.68
• 1Y Price Target: $113.86
• Price Target Upside: -9.13% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 7
• EPS Forecast (FY): 9.84
• Revenue Forecast (FY): $5.52B

• Rating: 74 Outperform
• Price Target: $131.00 ▲(4.55% Upside)
• Action: Reiterated Date: 02/24/26
• Date: Action: Reiterated 02/24/26

The score is primarily driven by strong cash flow generation and solid profitability, supported by an upward technical trend. It is tempered by leverage and cautious 2026 guidance that assumes ongoing demand softness and includes one-time costs, while valuation appears reasonable but not meaningfully boosted by dividend yield.

Positive Factors

Cash generation

Allison's operating cash flow has consistently covered net income (coverage above ~1.3x and ~1.82x in 2025) and free cash flow rebounded sharply in 2025. Durable cash conversion supports capex, debt reduction, share repurchases and reinvestment even through cyclical troughs.

High and resilient margins

Sustained gross margins near 47-49% and materially improved net margins reflect structural pricing power, product mix and cost control. Durable margin levels provide a buffer in cyclical end markets and underpin long-term earnings power and cash returns to shareholders.

Strategic Off-Highway acquisition & synergies

The Dana Off-Highway acquisition materially broadens Allison's product portfolio and global footprint, creating cross-selling and diversification into industrial/off-highway markets. A $120M synergy target and added leadership enhance long-term revenue and margin expansion potential.

Negative Factors

Elevated leverage

Material leverage, despite improvement from earlier peaks, limits financial flexibility in cyclical markets. High debt increases interest and refinancing risk, constrains capital allocation choices and makes the company more sensitive to sustained revenue weakness.

Near-term revenue softness

A multi-percent revenue decline and persistent weakness in North America On-Highway reduce visibility on top-line recovery. Prolonged demand softness pressures utilization, aftermarket volumes and investment returns, challenging sustainable organic growth in 2-6 months.

Integration, one-time costs and impairment

Significant acquisition-related charges, separation CapEx and a recent electrification impairment highlight execution risk and near-term earnings drag. These items introduce uncertainty in reported cash flow and slow realization of anticipated acquisition benefits.

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 transmissions and propulsion systems to OEMs (Original Equipment Manufacturers) and through aftermarket parts and services. The company's key revenue streams include direct sales of transmission systems to various sectors such as commercial trucks, buses, and military applications. Additionally, Allison earns revenue from the sale of replacement parts, service contracts, and maintenance services that support its products over their lifecycle. The company's strong relationships with major OEMs, as well as its focus on technological advancements and expanding its product offerings into hybrid and electric vehicle markets, significantly contribute to its earnings. Furthermore, partnerships with leading vehicle manufacturers enhance its market presence and drive consistent demand for its products.

Allison Transmission Holdings Financial Statement Overview

Summary

Strong profitability and excellent cash generation support the score, with operating cash flow consistently covering net income well and 2025 showing strong cash conversion. Offsetting factors are the still-elevated leverage profile (despite improvement) and signs of near-term top-line softness/revenue decline.

Income Statement

Profitability is a clear strength, with consistently strong gross margins (~47%–49%) and net margins improving meaningfully from 2020 to 2025 (roughly 14% to ~30%). Revenue has generally grown from 2021–2024, but 2025 shows a modest pullback (about -1.9%), signaling some near-term top-line softness. Overall, earnings power looks solid, but the latest year’s weaker revenue trend and some volatility in operating profitability metrics temper the score.

Balance Sheet

Leverage is the main constraint: debt remains high (about $2.9B in 2025) and debt-to-equity is elevated (~1.55x in 2025), though it has improved substantially versus 2021–2022 (near ~4.0x and ~2.9x). Equity has been rebuilt over time (from ~$0.6B in 2021 to ~$1.9B in 2025), which strengthens the capital base, but the balance sheet is still more levered than ideal for cyclical auto-related demand.

Cash Flow

Cash generation is a standout: operating cash flow has been consistently strong and covered net income well (coverage above ~1.3x across the period and ~1.82x in 2025). Free cash flow is also solid and, in 2025, matches operating cash flow and is about equal to net income, reflecting strong cash conversion. Free cash flow growth is volatile year to year, but the latest period shows a sharp rebound, supporting a high score.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.01B	3.23B	3.04B	2.77B	2.40B
Gross Profit	1.46B	1.53B	1.47B	1.30B	1.15B
EBITDA	1.03B	1.11B	1.09B	918.00M	838.00M
Net Income	623.00M	731.00M	673.00M	531.00M	442.00M
Balance Sheet
Total Assets	6.08B	5.34B	5.03B	4.67B	4.46B
Cash, Cash Equivalents and Short-Term Investments	1.50B	781.00M	555.00M	232.00M	127.00M
Total Debt	2.92B	2.42B	2.51B	2.52B	2.53B
Total Liabilities	4.21B	3.69B	3.79B	3.80B	3.82B
Stockholders Equity	1.87B	1.65B	1.23B	874.00M	634.00M
Cash Flow
Free Cash Flow	649.00M	658.00M	659.00M	490.00M	460.00M
Operating Cash Flow	824.00M	801.00M	784.00M	657.00M	635.00M
Investing Cash Flow	-184.00M	-147.00M	-129.00M	-183.00M	-212.00M
Financing Cash Flow	69.00M	-427.00M	-332.00M	-367.00M	-604.00M

Allison Transmission Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 125.30
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 125.3 is above the 20-day moving average (MA) of 116.86, above the 50-day MA of 109.22, and above the 200-day MA of 94.63, indicating a bullish trend. The MACD of 4.17 indicates Negative momentum. The RSI at 76.88 is Negative, neither overbought nor oversold. The STOCH value of 85.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALSN.

Allison Transmission Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ALSN	74 Outperform	$10.38B	17.10	35.42%	1.07%	-4.21%	-0.45%
LEA	72 Outperform	$6.66B	16.10	9.21%	2.63%	-1.90%	-13.86%
VC	72 Outperform	$2.57B	13.14	14.37%	0.57%	-4.03%	-39.51%
ALV	71 Outperform	$8.85B	12.40	30.32%	2.60%	0.84%	26.17%
BWA	62 Neutral	$11.92B	44.98	5.05%	1.24%	0.08%	-83.69%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
DAN	59 Neutral	$4.00B	77.50	-4.82%	1.70%	-18.23%	―

Allison Transmission Holdings Corporate Events

Allison Transmission Finalizes Major Dana Off-Highway Acquisition

On January 1, 2026, Allison Transmission Holdings completed its $2.732 billion acquisition of Dana Incorporated’s Off-Highway Drive & Motion Systems business, creating a combined enterprise with about $5.5 billion in revenue and operations across 29 countries, and on January 2, 2026 it announced related financing moves, including a $250 million increase and extension of its revolving credit facility to $1 billion maturing in 2031 and the addition of a new $1.2 billion term loan maturing in 2033 to help fund the deal and support general corporate purposes. The acquisition materially broadens Allison’s product portfolio and global footprint in off-highway and industrial mobility markets, reorganizes the company into two global business units under the Allison name, and brings in former Dana executive Craig M. Price as President and Business Unit Leader of the new Allison Off-Highway Drive & Motion Systems unit under a long-term incentive- and severance-backed employment arrangement, underscoring the strategic importance of integrating Dana’s off-highway operations and leadership to drive growth and enhance competitiveness across key end markets such as infrastructure, energy, agriculture, construction and national security.

The most recent analyst rating on (ALSN) stock is a Buy with a $115.00 price target. To see the full list of analyst forecasts on Allison Transmission Holdings stock, see the ALSN Stock Forecast page.