Allison Transmission Holdings, Inc. (ALSN)
Valuation Overview•Is Allison Transmission Holdings, Inc. Overvalued or Undervalued?
Trading at a discount across both intrinsic cash flow and relative peer multiples, indicating a strong margin of safety.
Moderate quality score of 69/100, reflecting stable operating margins and manageable leverage.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: Solid fundamental quality, though growth presents a headwind.
Wall Street sentiment is generally neutral alongside robust expected earnings growth. This is paired with healthy capital returns, driven predominantly by aggressive share repurchases.
ALSN exhibits elite business quality, driven by exceptional capital efficiency and highly lucrative margins (highlighted by a massive 22.2% ROIC). This is paired with a moderately leveraged but stable balance sheet.
The company exhibits steady, low-single-digit revenue growth paired with robust earnings compounding (9.8% EPS 3Y CAGR). The company maintains healthy operational efficiency with a 24.1% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $1.4B | -6.7% | +2.8% | +7.7% | +4.2% | |
| EBITDA | $195.0M | — | +5.3% | — | — | |
| Net Income | $112.0M | -14.8% | +5.5% | — | +13.1% | |
| EPS (Diluted) | $1.33 | -11.8% | +9.8% | +22.8% | +21.7% | |
| Free Cash Flow | $156.0M | -1.4% | +9.8% | +7.8% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 40.8% | 48.1% | 47.7% | 48.8% |
| Operating Margin | 24.1% | 31.1% | 29.9% | 29.6% |
| Net Margin | 14.9% | 21.8% | 20.6% | 19.7% |
| FCF Margin | 19.5% | 21.2% | 20.1% | 22.7% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $2.10 | $2.57 | +22.4% | ||
| Q1'26 | $1.56 | $1.18 | -24.4% | ||
| Q4'25 | $1.95 | $1.63 | -16.4% | ||
| Q3'25 | $2.20 | $2.29 | +4.1% | ||
| Q2'25 | $2.05 | $2.23 | +8.8% | ||
| Q1'25 | $1.90 | $2.01 | +5.8% | ||
| Q4'24 | $2.02 | $2.27 | +12.4% | ||
| Q3'24 | $2.02 | $2.13 | +5.4% |
Total return is +30.4% (1Y), outperforming the benchmark by +5.4%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +21.0% | +11.7% | — |
| 1Y | +30.4% | +5.4% | +1.2% |
| 3YCAGR | +31.9% | +12.3% | +5.9% |
| 5YCAGR | +26.2% | +13.1% | +12.4% |
| 10YCAGR | +16.3% | +2.8% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Allison Transmission Holdings, Inc. (ALSN) valuation, health, and returns.
Allison Transmission Holdings, Inc. is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. undervalued (implying +35.4% upside to DCF intrinsic value of $161.30)
Allison Transmission Holdings, Inc. has multiple valuation anchors: DCF Intrinsic Value: $161.30 | Peer Relative Fair Value: $173.27 | Wall Street Analyst Target: $118.50 (implying -0.5% upside). A convergence of these signals offers higher conviction.
Allison Transmission Holdings, Inc. displays good financial health with a composite quality score of 69/100, supported by a Altman Z-Score of 2.1 (grey zone), Piotroski F-Score of 6/9, Return on Invested Capital (ROIC) of 22.2%.
Allison Transmission Holdings, Inc. pays a 0.9% dividend yield, covered by a 15% payout ratio with 6 years of growth, supplemented by a 3.3% buyback yield.
Allison Transmission Holdings, Inc.'s current growth trajectory is Decelerating. The company achieved -6.7% 1Y revenue growth and -11.8% 1Y EPS growth, compared to its 3Y revenue CAGR of +2.8%.
Wall Street consensus is Hold based on 29 analysts, beating EPS expectations in 83% of recent quarters with a 1-quarter streak. The consensus price target represents a -0.5% change from current levels.
Investment risks for Allison Transmission Holdings, Inc. include: -20.6% 1-year max drawdown. Volatility risk is characterized by a beta of 1.09x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.