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Allison Transmission Holdings
(NYSE:ALSN)
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Rating:66Neutral
Price Target:
$115.00
▼(-10.70% Downside)
Action:Reiterated
Date:08/04/26
The score is driven primarily by solid revenue growth and strong free cash flow, tempered by rising leverage and meaningful recent margin compression. The latest earnings call was constructive with raised guidance and strong operational highlights, while technical signals remain neutral and valuation appears reasonable but not compelling.
Positive Factors
Revenue Growth and Synergy Potential
The Off-Highway acquisition has materially expanded Allison’s revenue base, while the defined synergy program provides a multi-year opportunity to improve efficiency. Although realization is phased, the combination can strengthen scale, broaden offerings, and support earnings growth beyond the initial integration period.
Negative Factors
Elevated Leverage
Higher leverage increases Allison’s sensitivity to any sustained earnings weakness and reduces financial flexibility during the Off-Highway integration. Debt obligations can also compete with investment, shareholder returns, and acquisition-related spending if operating conditions become less favorable.
Read all positive and negative factors
Positive Factors
Negative Factors
Revenue Growth and Synergy Potential
The Off-Highway acquisition has materially expanded Allison’s revenue base, while the defined synergy program provides a multi-year opportunity to improve efficiency. Although realization is phased, the combination can strengthen scale, broaden offerings, and support earnings growth beyond the initial integration period.
Read all positive factors
Allison Transmission Holdings (ALSN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.78B
Dividend Yield1.07%
Average Volume (3M)763.94K
Price to Earnings (P/E)16.8
Beta (1Y)0.86
Revenue Growth37.56%
EPS Growth-28.71%
CountryUS
Employees4,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)6.34
Shares Outstanding82,578,040
10 Day Avg. Volume562,618
30 Day Avg. Volume763,943
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 Cap1.52
Enterprise Value/Revenue3.60
Enterprise Value/Gross Profit9.10
Enterprise Value/Ebitda12.10
Forecast
1Y Price Target
$134.60Price Target Upside4.52% Upside
Rating ConsensusHold
Number of Analyst Covering6
EPS Forecast (FY)8.12
Revenue Forecast (FY)$5.94B
Allison Transmission Holdings Business Overview & Revenue Model
Company Description
Allison Transmission Holdings, Inc. (ALSN), along with its affiliates, specializes in the global development, manufacturing, and sale of fully-automatic transmissions. These robust systems are engineered for both medium and heavy-duty commercial v...
How the Company Makes Money
Allison makes money primarily by selling transmissions and related propulsion solutions, plus recurring aftermarket parts and service-related revenue supported by its distribution network.
1) New equipment (OEM) transmission sales: A major revenu...
Allison Transmission Holdings Earnings Call Summary
Earnings Call Date:Aug 03, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 02, 2026
Earnings Call Sentiment Positive
The call conveyed strong positive financial and operational momentum driven by the Off-Highway acquisition, record transmission revenues, sizeable defense contract wins, robust adjusted EBITDA and record free cash flow, plus an upward revision to full-year guidance. Key short-term negatives include material-cost-driven margin pressure in the legacy transmission business, sizeable one-time acquisition and integration expenses, seasonal softness in Off-Highway (Q3), and regional weakness in the Americas and agriculture end markets. Management provided a clear $120M synergy plan and a multi-year realization timeline, but noted limited impact from those synergies on 2026 guidance.Positive Updates
Huge Consolidated Revenue Increase
Second quarter net sales of $1.566 billion, up 92% year-over-year, driven by the acquisition of the Allison Off-Highway business and a 6% year-over-year increase in the Allison Transmission business unit.
Negative Updates
Material Cost Inflation Compressing Legacy Margins
Legacy transmission business experienced margin compression driven primarily by material cost headwinds (mid-teens year-over-year impact) with aluminum rising nearly 25% quarter-over-quarter; passthrough mechanisms exist but operate on a 6- to 12-month lag.
Read all updates
Q2-2026 Updates
Positive
Negative
Huge Consolidated Revenue Increase
Second quarter net sales of $1.566 billion, up 92% year-over-year, driven by the acquisition of the Allison Off-Highway business and a 6% year-over-year increase in the Allison Transmission business unit.
Read all positive updates
Company Guidance
Allison raised its full‑year 2026 guidance to consolidated net sales of $5.8–$6.0 billion, consolidated net income of $600–$700 million (which includes roughly $140 million of one‑time pretax separation/integration and restructuring costs, including about $75 million related to stepped‑up inventory), and consolidated adjusted EBITDA of $1.465–$1.575 billion (midpoint implying ~26% adjusted EBITDA margin); the company expects consolidated net cash provided by operating activities of $1.025–$1.125 billion (which includes ~$55 million of one‑time acquisition‑related cash outlays), consolidated capital expenditures of $260–$280 million (including ~$30 million of one‑time separation/integration spend), and consolidated adjusted free cash flow of $745–$865 million; management noted no material synergies are baked into 2026 EBITDA, reiterated a $120 million annual run‑rate synergy target (60% procurement/logistics, 20% operations/footprint, 20% org efficiency) with ~40% realization by end‑2027, another 40% by end‑2028 and full realization by end‑2029, and emphasized near‑term priorities to fund growth, reduce debt toward a ~2x leverage target (Q2 revolver repayment of $150 million), and return excess cash via dividends ($0.29/quarter) and buybacks ($46 million repurchased in Q2).Allison Transmission Holdings Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
58
Neutral
Cash Flow
67
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.70B | 3.01B | 3.23B | 3.04B | 2.77B | 2.40B |
| Gross Profit | 1.46B | 1.46B | 1.53B | 1.47B | 1.30B | 1.15B |
| EBITDA | 1.10B | 1.03B | 1.11B | 1.09B | 918.00M | 838.00M |
| Net Income | 529.00M | 623.00M | 731.00M | 673.00M | 531.00M | 442.00M |
Balance Sheet | ||||||
| Total Assets | 8.72B | 6.08B | 5.34B | 5.03B | 4.67B | 4.46B |
| Cash, Cash Equivalents and Short-Term Investments | 399.00M | 1.50B | 781.00M | 555.00M | 232.00M | 127.00M |
| Total Debt | 4.11B | 2.92B | 2.42B | 2.52B | 2.52B | 2.53B |
| Total Liabilities | 6.74B | 4.21B | 3.69B | 3.79B | 3.80B | 3.82B |
| Stockholders Equity | 1.98B | 1.87B | 1.65B | 1.23B | 874.00M | 634.00M |
Cash Flow | ||||||
| Free Cash Flow | 731.00M | 649.00M | 658.00M | 659.00M | 490.00M | 460.00M |
| Operating Cash Flow | 933.00M | 824.00M | 801.00M | 784.00M | 657.00M | 635.00M |
| Investing Cash Flow | -2.74B | -184.00M | -147.00M | -129.00M | -183.00M | -212.00M |
| Financing Cash Flow | 1.44B | 69.00M | -427.00M | -332.00M | -367.00M | -604.00M |
Allison Transmission Holdings Technical Analysis
Negative
128.78
Price Trends
119.52
Negative
118.50
Negative
118.01
Negative
Market Momentum
-2.69
Positive
32.81
Neutral
33.05
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 128.78 is above the 20-day moving average (MA) of 111.99, above the 50-day MA of 119.52, and above the 200-day MA of 118.01, indicating a bearish trend. The MACD of -2.69 indicates Positive momentum. The RSI at 32.81 is Neutral, neither overbought nor oversold. The STOCH value of 33.05 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 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 |
|---|---|---|---|---|---|---|---|
66 Neutral | $8.78B | 16.77 | 27.88% | 1.07% | 37.56% | -28.71% | |
66 Neutral | $871.55M | 8.03 | 7.32% | 3.75% | 21.01% | 72.22% | |
65 Neutral | $11.19B | 27.21 | 7.37% | 1.24% | 2.17% | 111.19% | |
63 Neutral | $2.10B | 16.24 | 8.62% | 2.04% | 7.65% | 35.57% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
56 Neutral | $526.86M | -9.97 | -27.94% | ― | 163.22% | 8.70% | |
55 Neutral | $2.89B | -16.77 | -13.31% | 1.71% | -15.78% | -355.78% |
* Consumer Cyclical Sector Average
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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.