Fact based stock research
Allison Transmission (NYSE:ALSN)

US01973R1014

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Allison Transmission stock research in summary

allisontransmission.com

ANALYSIS: With an Obermatt Combined Rank of 10 (worse than 90% compared with investment alternatives), Allison Transmission (Heavy Machinery, USA) shares have lower financial characteristics compared with similar stocks. Shares of Allison Transmission are low in value (priced high) with a consolidated Value Rank of 29 (worse than 71% of alternatives), and are riskily financed (Safety Rank of 4, which means above-average debt burdens) but show above-average growth (Growth Rank of 89). ...read more

RECOMMENDATION: A Combined Rank of 10, is a sell recommendation based on Allison Transmission's financial characteristics. As the company Allison Transmission shows low value with an Obermatt Value Rank of 29 (71% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 89% of comparable companies (Obermatt Growth Rank is 89). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 4 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Allison Transmission, even a low-value company (in terms of its key financial indicators) can be a good investment. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	29
Growth Rank	89
Safety Rank	4
Combined Rank	10

Country	USA
Industry	Heavy Machinery
Index	Dividends USA
Size class	X-Large

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Allison Transmission

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	64	49	48	29
GROWTH
GROWTH	35	27	45	89
SAFETY
SAFETY	2	33	4	4
SENTIMENT
SENTIMENT	n/a	54	48	^new
360° VIEW
360° VIEW	n/a	17	12	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Allison Transmission is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	64	49	48	29
GROWTH
GROWTH	35	27	45	89
SAFETY
SAFETY	2	33	4	4
COMBINED
COMBINED	23	8	4	10

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of Allison Transmission the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 29 (worse than 71% compared with alternatives), Allison Transmission shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Allison Transmission. Price-to-Profit (also referred to as price-earnings, P/E) is 73 which means that the stock price compared with what market professionals expect for future profits is lower than for 73% of comparable companies, indicating a good value concerning Allison Transmission's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 6, which means that the stock price is lower as regards to invested capital than for 6% of comparable investments. On the other hand, Price-to-Sales is less favorable than 79% of alternatives (only 21% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 43% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 29, is a hold recommendation based on Allison Transmission's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	46	43	30	21
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	98	88	88	73
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	6	10	18	6
DIVIDEND YIELD
DIVIDEND YIELD	73	81	74	57
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	64	49	48	29

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Allison Transmission; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 89 (better than 89% compared with alternatives) for 2024, Allison Transmission shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Allison Transmission. Sales Growth has a rank of 53 which means that currently, professionals expect the company to grow more than 53% of its competitors. Capital Growth is also above 45% of competitors with a rank of 86, and Stock Returns with the rank of 97 is also an outperformance. Only Profit Growth is low with a rank of 45 which means that currently, professionals expect the company to grow its profits less than 55% of its competitors. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 89, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, Allison Transmission is a good growth stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	20	47	10	53
PROFIT GROWTH
PROFIT GROWTH	23	51	69	45
CAPITAL GROWTH
CAPITAL GROWTH	n/a	30	60	86
STOCK RETURNS
STOCK RETURNS	59	41	67	97
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	35	27	45	89

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Allison Transmission.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 4 (better than 4% compared with alternatives), the company Allison Transmission has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Allison Transmission is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Allison Transmission. Liquidity is at 56, meaning the company generates more profit to service its debt than 56% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 30, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 70% of its competitors. Leverage is also high at a rank of 6, which means that the company has an above-average debt-to-equity ratio. It has more debt than 94% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 4 (worse than 96% compared with alternatives), Allison Transmission has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	4	8	6	6
REFINANCING
REFINANCING	22	97	34	30
LIQUIDITY
LIQUIDITY	37	36	40	56
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	2	33	4	4

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Allison Transmission and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	9	23	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	64	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	96	100	^new
MARKET PULSE
MARKET PULSE	n/a	24	27	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	54	48	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Allison Transmission.
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