One-glance verdict
Within fair range
$112.74 our estimate vs market $126.94
Wall Street consensus: $139.40 (23.7% higher than our fair-value estimate)
13% above our estimate
Fundamentals snapshot
Allison Transmission Holdings, Inc.
ALSN · NYQ · Consumer Cyclical · Auto Parts
Current price
$126.94
52-week range
$76.01 - $137.62
Market cap
$10.48B
Balance sheet
Distressed
9.88x Adequate
Net debt $3.79B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 46.2% last year.
- Reward Returns 28.3% on equity, ahead of 83% of its peers.
- Risk Stock trades 92.5% above its 5-year average P/E.
- Risk Operating margin compressed from 28.3% to 19.1% over 3 years.
What this company does
Allison Transmission Holdings, Inc.
Allison Transmission makes the automatic gearboxes that run in essential heavy-duty vehicles like garbage trucks, school buses, and military equipment. Besides selling new transmissions, the company generates significant recurring revenue (predictable, ongoing sales from existing customers) by providing replacement parts and services for the millions of its products already in use around the world.
How the company got here
Allison began in 1915, not making transmissions, but supporting a race car team for the Indianapolis 500. The company shifted gears to support U.S. war efforts in both World Wars, developing aircraft engines and components. After the wars, it applied that expertise to create the first automatic transmissions for heavy-duty vehicles like buses and trucks. For many years, it was part of General Motors, but became an independent company again in 2007 and has since expanded globally.
What it actually does
Think of the system that automatically changes gears in a big city bus, a garbage truck, or a military vehicle – that's what Allison makes. They design and build these specialized automatic transmissions for all sorts of large, heavy-duty commercial and defense vehicles. Beyond new transmissions, they also sell replacement parts, remanufactured transmissions, and are developing electric propulsion systems, which are essentially electric versions of the systems that make vehicles move.
North America On-Highway
This is the company's largest business segment, making up more than half of its sales. It involves selling automatic transmissions to manufacturers of medium and heavy-duty trucks that operate on roads in North America. Customers are the makers of vehicles like delivery trucks, garbage trucks, school buses, and fire trucks who install Allison's transmissions into the vehicles they build.
Outside North America On-Highway
This division sells the same types of automatic transmissions for road-based commercial vehicles to customers in Europe, Asia, South America, and other international markets. While automatic transmissions are common in North American trucks, many international markets still primarily use manual transmissions, presenting a growth opportunity for the company. This segment represents a significant, and growing, portion of the company's revenue.
Service Parts, Support Equipment & Other
This part of the business focuses on everything that happens after the initial sale of a transmission. It includes selling branded replacement parts, support equipment, and other products needed to service the millions of Allison transmissions already in use. This creates a steady stream of revenue because as long as their transmissions are on the road, there will be a need for maintenance and repairs. This segment is a substantial contributor to the company's overall business, making up about a fifth of its revenue.
Defense
This segment provides transmissions for medium- and heavy-tactical U.S. military vehicles, both wheeled and tracked. The company has a long history of working with the U.S. government, providing durable and reliable transmissions for vehicles that operate in demanding conditions. While smaller than the on-highway segments, it provides a consistent source of business and has been experiencing strong growth.
Global Off-Highway
This is the company's business line for vehicles that don't typically drive on public roads. It provides transmissions for heavy-duty equipment used in the energy, mining, and construction industries, such as hydraulic fracturing equipment and large mining trucks. This is a smaller part of Allison's overall business, but a recent major acquisition has significantly expanded its presence in this market.
What management is betting on now
The company is focused on protecting its main business in North American trucks while expanding its sales in international markets where automatic transmissions are less common. A major priority is growing its service and parts business, which provides a steady income from the large number of their transmissions already in use. They are also investing heavily in developing and selling electrified propulsion systems, like electric axles and hybrid systems, to meet the growing demand for lower-emission and electric commercial vehicles.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$210.00M
FY2024 Q4
$136.00M
FY2025 Q1
$155.00M
FY2025 Q2
$153.00M
FY2025 Q3
$184.00M
FY2025 Q4
$169.00M
FY2026 Q1
$103.00M
FY2026 Q2
$281.00M
Revenue
$1.57B
Net income
$181.00M
Diluted EPS
2.15
Operating cash flow
$312.00M
Free cash flow
$281.00M
Fetching…
Sources
Revenue
$1.41B
Net income
$112.00M
Diluted EPS
1.33
Operating cash flow
$156.00M
Free cash flow
$103.00M
Fetching…
Sources
Revenue
$737.00M
Net income
$99.00M
Diluted EPS
1.18
Operating cash flow
$243.00M
Free cash flow
$169.00M
Fetching…
Sources
Revenue
$693.00M
Net income
$137.00M
Diluted EPS
1.63
Operating cash flow
$228.00M
Free cash flow
$184.00M
Fetching…
Sources
Revenue
$814.00M
Net income
$195.00M
Diluted EPS
2.29
Operating cash flow
$184.00M
Free cash flow
$153.00M
Fetching…
Sources
Revenue
$766.00M
Net income
$192.00M
Diluted EPS
2.23
Operating cash flow
$181.00M
Free cash flow
$155.00M
Fetching…
Sources
Revenue
$796.00M
Net income
$175.00M
Diluted EPS
2.01
Operating cash flow
$211.00M
Free cash flow
$136.00M
Fetching…
Sources
Revenue
$824.00M
Net income
$200.00M
Diluted EPS
2.27
Operating cash flow
$246.00M
Free cash flow
$210.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $112.74 vs current price $126.94
Wall Street consensus is the average analyst price target: $139.40 (23.7% higher than our fair-value estimate).
Our most-likely fair value is $112.74 a share — about 11.2% away from today's price of $126.94, so the stock currently looks fairly priced.
Is it drowning in debt?
Distressed
Net debt $3.8B. Interest coverage 9.9x.
Net debt
$3.79B
Interest coverage
9.88x
Allison Transmission Holdings, Inc.'s profit covers its interest bill about 9.9 times over.
Distressed
Worse cushion
Baseline
Better cushion
ALSN
BASELINE
Allison Transmission Holdings, Inc.
Total debt $4.19B Interest coverage 9.88x This is the baseline the peer rows are being compared against.
Total debt $8.29B Interest coverage 11.75x +19% vs ALSN Carries about 1.2x more debt cushion than ALSN.
Total debt $4.06B Interest coverage 13.36x +35% vs ALSN Carries about 1.4x more debt cushion than ALSN.
Total debt $1.50B Interest coverage 1.18x -88% vs ALSN Carries about 8.4x less debt cushion than ALSN.
Total debt $21.33B Interest coverage 21.61x +119% vs ALSN Carries about 2.2x more debt cushion than ALSN.
Total debt $14.82B Interest coverage 10.42x +5% vs ALSN Has roughly the same debt cushion as ALSN.
What you should know
The case for and against ALSN
3 Rewards
2 Risks
Rewards
-
Revenue grew 46.2% last year.
-
Returns 28.3% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Stock trades 92.5% above its 5-year average P/E.
-
Operating margin compressed from 28.3% to 19.1% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
20.09x
Forward P/E
11.24x
P/B
5.30x
P/S
2.38x
EV/EBITDA
12.05x
PEG ratio
0.59x
Profitability
How much profit each dollar creates
Gross margin
37.8%
Operating margin
19.1%
Net margin
12.0%
ROE
28.3%
ROA
8.5%
Health
Liquidity and balance-sheet strength
Debt / equity
2.12x
Current ratio
1.81x
Quick ratio
0.99x
Total debt
$4.19B
Total cash
$399.00M
Growth
How the business has been compounding
Revenue TTM
$4.40B
Revenue 5Y CAGR
5.8%
EPS TTM
6.32
EPS 5Y CAGR
9.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$939.00M
Free CF TTM
$661.00M
FCF margin
15.0%
Dividend
Shareholder payout
Yield
0.9%
Payout ratio
17.7%
Last ex-div date
2026-08-21