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Allison Transmission Holdings (ALSN)
NYSE:ALSN
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Allison Transmission Holdings
(NYSE:ALSN)
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Rating:68Neutral
Price Target:
$96.00
▲(13.29% Upside)
Allison Transmission Holdings shows strong financial performance with robust profitability and cash flow generation. However, technical indicators suggest a lack of momentum, and the earnings call revealed flat revenue growth despite strategic market expansions. The valuation appears attractive, but the company's high leverage remains a concern.
Positive Factors
Cash Flow Generation
Strong cash flow generation indicates robust operational efficiency, providing the company with the flexibility to invest in growth opportunities and manage debt effectively.
Defense Market Growth
Significant growth in the defense market underscores the company's ability to capitalize on strategic initiatives, enhancing its market position and revenue diversification.
International Market Expansion
Record sales in international markets reflect successful expansion efforts, contributing to revenue stability and reducing reliance on domestic markets.
Negative Factors
High Leverage
High leverage poses a risk to financial stability, potentially limiting the company's ability to invest in growth and increasing vulnerability to economic downturns.
Decline in Key Markets
Declines in key markets could hinder overall revenue growth, challenging the company to find new growth avenues and maintain its competitive edge.
Flat Revenue Growth
Flat revenue growth suggests potential challenges in market penetration and product demand, necessitating strategic adjustments to drive future growth.
Allison Transmission Holdings (ALSN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.23B
Dividend Yield1.23%
Average Volume (3M)895.69K
Price to Earnings (P/E)9.8
Beta (1Y)0.97
Revenue Growth2.70%
EPS Growth15.17%
CountryUS
Employees4,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)2.29
Shares Outstanding83,616,720
10 Day Avg. Volume798,064
30 Day Avg. Volume895,687
Financial Highlights & Ratios
PEG Ratio1.05
Price to Book (P/B)5.69
Price to Sales (P/S)2.92
P/FCF Ratio14.29
Enterprise Value/Market Cap1.34
Enterprise Value/Revenue3.04
Enterprise Value/Gross Profit6.27
Enterprise Value/Ebitda8.53
Forecast
1Y Price Target
$98.14Price Target Upside15.81% Upside
Rating ConsensusHold
Number of Analyst Covering7
Allison Transmission Holdings Business Overview & Revenue Model
Company DescriptionAllison 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 MoneyAllison Transmission generates revenue primarily through the sale of its automatic transmissions and propulsion systems to original equipment manufacturers (OEMs) and aftermarket customers. The company has a diversified revenue model that includes both new product sales and aftermarket parts and services, which provide ongoing support and maintenance for its products. Key revenue streams include the sale of transmissions to commercial vehicle manufacturers, parts sales, and service contracts. Additionally, strategic partnerships with major truck manufacturers and military contracts contribute significantly to its earnings, as these relationships ensure a steady demand for its products in various markets.
Allison Transmission Holdings Earnings Call Summary
Earnings Call Date:Aug 04, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong growth in defense and international markets, alongside strategic acquisitions. However, these were balanced by declines in other segments such as the Global Off-Highway and North America On-Highway markets, resulting in overall flat revenue growth.Q2-2025 Updates
Positive Updates
Strong Defense Market Growth
Defense market net sales increased 47% year-over-year, driven by new orders and strategic initiatives.
Record Sales in the Outside North America On-Highway Market
Outside North America On-Highway net sales reached a record $142 million, an 11% increase year-over-year, driven by higher demand in South America and Europe.
Acquisition of Dana's Off-Highway Business
Allison announced the acquisition of Dana's Off-Highway business for $2.700 billion, expected to close in late Q4 2025, with identified annual run rate synergies of $120 million.
Improved Gross Profit and Net Income
Gross profit increased by $8 million to $402 million, and net income rose by $8 million to $195 million compared to the same period in 2024.
Negative Updates
Decline in Global Off-Highway and North America On-Highway Markets
Global Off-Highway market sales decreased by 30%, and North America On-Highway sales decreased by 9% year-over-year.
Flat Overall Revenue Growth
Year-over-year net sales of $814 million were flat from the same period in 2024.
Challenges with North America On-Highway Market
Significant revisions in North America On-Highway build rates due to OEMs responding to market demand conditions.
Company Guidance
During the Allison Transmission Second Quarter 2025 Earnings Conference Call, guidance for the full year 2025 was updated. The company now expects net sales to range between $3.075 billion and $3.175 billion, with net income projected between $640 million and $680 million. Adjusted EBITDA is anticipated to be between $1.130 billion and $1.180 billion, maintaining the midpoint of the implied full-year adjusted EBITDA margin guidance. Net cash provided by operating activities is expected to be between $785 million and $835 million, with capital expenditures ranging from $165 million to $175 million, and adjusted free cash flow projected between $620 million and $660 million. The guidance adjustment reflects current end market conditions, anticipated acquisition-related expenses, and favorable cash income tax impacts from recent legislative changes.Allison Transmission Holdings Financial Statement Overview
Summary
Allison Transmission Holdings demonstrates strong profitability and cash flow generation, with robust EBIT and EBITDA margins. However, the negative revenue growth rate and high leverage are concerns, despite improvements in debt management.Income Statement
Allison Transmission Holdings shows strong profitability with a consistent gross profit margin around 48% and a net profit margin improving to 23.8% in TTM. However, the revenue growth rate has turned negative in the TTM period, indicating potential challenges in maintaining sales momentum. The EBIT and EBITDA margins are robust, reflecting efficient cost management.78
Positive
Balance Sheet
The company's balance sheet reflects a high debt-to-equity ratio of 1.38 in TTM, indicating significant leverage, although it has improved from previous years. Return on equity remains strong at 45.6%, showcasing effective use of equity capital. The equity ratio is moderate, suggesting a balanced asset structure.65
Positive
Cash Flow
Cash flow metrics are solid, with a positive free cash flow growth rate of 5.2% in TTM and a strong operating cash flow to net income ratio of 1.74. The free cash flow to net income ratio is healthy at 0.83, indicating good cash generation relative to earnings.82
Very Positive
| 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 | 1.55B | 1.53B | 1.47B | 1.30B | 1.15B | 998.00M |
| EBITDA | 1.14B | 1.11B | 1.09B | 918.00M | 838.00M | 678.00M |
| Net Income | 762.00M | 731.00M | 673.00M | 531.00M | 442.00M | 299.00M |
Balance Sheet | ||||||
| Total Assets | 5.41B | 5.34B | 5.03B | 4.67B | 4.46B | 4.48B |
| Cash, Cash Equivalents and Short-Term Investments | 778.00M | 781.00M | 562.00M | 232.00M | 127.00M | 310.00M |
| Total Debt | 2.42B | 2.42B | 2.52B | 2.51B | 2.51B | 2.51B |
| Total Liabilities | 3.66B | 3.69B | 3.79B | 3.80B | 3.82B | 3.72B |
| Stockholders Equity | 1.75B | 1.65B | 1.23B | 874.00M | 634.00M | 756.00M |
Cash Flow | ||||||
| Free Cash Flow | 711.00M | 658.00M | 659.00M | 490.00M | 460.00M | 446.00M |
| Operating Cash Flow | 822.00M | 801.00M | 784.00M | 657.00M | 635.00M | 561.00M |
| Investing Cash Flow | -174.00M | -147.00M | -129.00M | -183.00M | -212.00M | -111.00M |
| Financing Cash Flow | -525.00M | -427.00M | -332.00M | -367.00M | -604.00M | -335.00M |
Allison Transmission Holdings Technical Analysis
Negative
84.74
Price Trends
87.77
Negative
92.29
Negative
96.96
Negative
Market Momentum
-0.84
Positive
39.64
Neutral
35.92
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 84.74 is below the 20-day moving average (MA) of 87.13, below the 50-day MA of 87.77, and below the 200-day MA of 96.96, indicating a bearish trend. The MACD of -0.84 indicates Positive momentum. The RSI at 39.64 is Neutral, neither overbought nor oversold. The STOCH value of 35.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALSN.
Allison Transmission Holdings Risk Analysis
Allison Transmission Holdings disclosed 37 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 |
|---|---|---|---|---|---|---|---|
82 Outperform | $3.32B | 11.53 | 22.96% | 0.23% | -3.26% | -45.84% | |
79 Outperform | $9.83B | 14.01 | 29.99% | 2.32% | -0.98% | 21.64% | |
76 Outperform | $5.53B | 12.15 | 9.51% | 2.99% | -3.12% | -8.23% | |
68 Neutral | $7.23B | 9.82 | 47.08% | 1.23% | 2.70% | 15.17% | |
67 Neutral | $9.68B | 47.77 | 3.66% | 1.13% | -2.12% | -69.42% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | $2.56B | ― | -5.00% | 2.05% | -14.46% | -2170.83% |
* Consumer Cyclical Sector Average
ALSN
Allison Transmission Holdings
84.74
-12.06
-12.46%
ALV
Autoliv
127.38
36.28
39.82%
BWA
BorgWarner
44.41
10.22
29.89%
DAN
Dana Incorporated
19.53
9.29
90.72%
LEA
Lear
102.92
1.95
1.93%
VC
Visteon
121.58
31.78
35.39%
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.