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Are Investors Undervaluing Allison Transmission Holdings (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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Allison Transmission Holdings (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 6.87, which compares to its industry's average of 19.46. Over the past year, ALSN's Forward P/E has been as high as 9.72 and as low as 6.54, with a median of 7.53.

Finally, investors should note that ALSN has a P/CF ratio of 6.21. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ALSN's P/CF compares to its industry's average P/CF of 17.74. ALSN's P/CF has been as high as 10.28 and as low as 5.66, with a median of 6.82, all within the past year.

LCI Industries (LCII - Free Report) may be another strong Automotive - Original Equipment stock to add to your shortlist. LCII is a # 2 (Buy) stock with a Value grade of A.

LCI Industries also has a P/B ratio of 2.26 compared to its industry's price-to-book ratio of 3.18. Over the past year, its P/B ratio has been as high as 3.96, as low as 1.96, with a median of 3.34.

Value investors will likely look at more than just these metrics, but the above data helps show that Allison Transmission Holdings and LCI Industries are likely undervalued currently. And when considering the strength of its earnings outlook, ALSN and LCII sticks out as one of the market's strongest value stocks.


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