Company Overview
Allison Transmission Holdings, Inc. operates as a global manufacturer and designer of fully automatic transmissions specifically engineered for medium- and heavy-duty commercial vehicles, alongside medium- and heavy-tactical U.S. defense vehicles and electrified propulsion systems. The company functions within the Consumer Cyclical sector, specifically the Auto Parts industry, positioning it as a supplier of critical components directly tied to the performance and durability of the broader transportation infrastructure. With a market capitalization of $9.51B and annual revenue of $3.01B, the entity represents a significant capitalization within its niche, supported by a workforce of 4000 employees. These valuation and revenue figures indicate a substantial enterprise scale that allows for diversified operations across multiple geographic markets and vehicle types, establishing a foundational presence in the heavy-duty automotive supply chain.
Financial Health
The company reported revenue of $3.01B over the trailing twelve months, generating net income of $623.00M and EBITDA of $1.04B. The substantial gap between the $3.01B in revenue and the $623.00M in net income highlights a cost structure that successfully retains over 20% of top-line sales as profit, while the EBITDA figure of $1.04B demonstrates a robust operational earnings power before financing and non-cash expenses. Free cash flow stands at $466.75M, indicating a strong capacity to generate liquidity from operations which provides significant financial flexibility for capital allocation, debt servicing, or potential strategic acquisitions without relying on external financing. The gross margin is recorded at 48.6%, reflecting high pricing power or efficient production costs relative to the cost of goods sold, while the operating margin of 27.3% and profit margin of 20.7% further attest to the company's ability to control overhead and deliver earnings to shareholders. The balance sheet holds $127.00M in cash against a debt level listed as N/A, with a debt-to-equity ratio of 395.90 which suggests a capital structure heavily reliant on equity or where debt figures are not disclosed in standard reporting formats, potentially indicating a conservative approach to leverage or specific accounting treatments for debt obligations. The current ratio is 4.85, a figure that signifies robust short-term liquidity as the company holds current assets nearly five times its current liabilities, ensuring it can comfortably meet obligations due within a year. Return on Equity stands at 35.4% and Return on Assets is 10.0%, metrics that reveal highly effective management in deploying capital to generate returns, particularly given the high equity multiplier implied by the debt-to-equity figure.
Valuation Assessment
The trailing twelve-month P/E ratio is 15.62, while the forward P/E is 9.80, implying that the market expects a significant acceleration in earnings growth that would justify the current stock price relative to future profitability. The price-to-book ratio is 18.36, indicating a substantial market premium over the company's book value, which suggests investors are pricing in intangible assets, brand strength, or future growth potential that exceeds the recorded net asset value. Alternative valuation metrics such as a price-to-sales ratio of 3.16 and an EV/EBITDA of 11.10 provide context that the company is valued based on revenue generation and earnings quality, though the high P/S multiple relative to the P/E suggests the market is willing to pay a premium for its revenue growth profile. The 52-week high is $128.85 and the 52-week low is $76.01; without a specific current price in the provided facts, the range defines the volatility band within which the stock has traded, with the forward P/E of 9.80 suggesting the market anticipates a move toward the upper end of this historical range if earnings expectations are met. The beta is 0.95, meaning the stock's price volatility is roughly in line with the broader market, offering a risk profile that does not significantly amplify or dampen systemic market movements.
Growth & Income
Revenue growth is recorded at 20.4% year-over-year, while earnings growth is 117.0% year-over-year, indicating that earnings are expanding at a rate significantly faster than revenue, which often implies improving operating leverage or margin expansion as volume scales. The company offers a dividend yield of 1.0% with a payout ratio of 14.7%, a low payout percentage that is highly sustainable given the robust earnings growth, allowing the firm to retain the majority of profits for reinvestment while still providing income to shareholders. This conservative dividend policy aligns with the high return on equity of 35.4%, ensuring that the company maintains a strong balance sheet while rewarding investors through a modest but reliable yield. Overall, the growth and income profile presents a combination of high earnings acceleration and a conservative dividend approach, balancing capital retention for expansion with a tangible return for existing shareholders.