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Are Investors Undervaluing Allison Transmission (ALSN) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Allison Transmission (ALSN - Free Report) . ALSN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.74, which compares to its industry's average of 18.93. Over the last 12 months, ALSN's Forward P/E has been as high as 13.52 and as low as 6.80, with a median of 11.03.

ALSN is also sporting a PEG ratio of 1.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALSN's industry currently sports an average PEG of 1.61. Over the past 52 weeks, ALSN's PEG has been as high as 1.93 and as low as 0.97, with a median of 1.52.

Finally, we should also recognize that ALSN has a P/CF ratio of 6.86. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ALSN's current P/CF looks attractive when compared to its industry's average P/CF of 8.82. Within the past 12 months, ALSN's P/CF has been as high as 7.74 and as low as 4.12, with a median of 6.78.

These are just a handful of the figures considered in Allison Transmission's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ALSN is an impressive value stock right now.


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