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Allison Transmission Holdings, Inc. (ALSN) Hit a 52 Week High, Can the Run Continue?
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Shares of Allison Transmission (ALSN - Free Report) have been strong performers lately, with the stock up 7.8% over the past month. The stock hit a new 52-week high of $61.76 in the previous session. Allison Transmission has gained 5.6% since the start of the year compared to the 22.4% move for the Zacks Auto-Tires-Trucks sector and the 0.8% return for the Zacks Automotive - Original Equipment industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 25, 2023, Allison Transmission reported EPS of $1.76 versus consensus estimate of $1.72.
For the current fiscal year, Allison Transmission is expected to post earnings of $7.03 per share on $3.02 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $7.62 per share on $3.03 billion in revenues. This represents a year-over-year change of 1.32% and 0.54%, respectively.
Valuation Metrics
Allison Transmission may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Allison Transmission has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 8.7X current fiscal year EPS estimates, which is not in-line with the peer industry average of 11.7X. On a trailing cash flow basis, the stock currently trades at 8.2X versus its peer group's average of 7.2X. Additionally, the stock has a PEG ratio of 1.25. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Allison Transmission currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Allison Transmission fits the bill. Thus, it seems as though Allison Transmission shares could still be poised for more gains ahead.
How Does ALSN Stack Up to the Competition?
Shares of ALSN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Gentex Corporation (GNTX - Free Report) . GNTX has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of D.
Earnings were strong last quarter. Gentex Corporation beat our consensus estimate by 13.64%, and for the current fiscal year, GNTX is expected to post earnings of $2.16 per share on revenue of $2.51 billion.
Shares of Gentex Corporation have gained 4.1% over the past month, and currently trade at a forward P/E of 15.57X and a P/CF of 19X.
The Automotive - Original Equipment industry may rank in the bottom 59% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for ALSN and GNTX, even beyond their own solid fundamental situation.
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Allison Transmission Holdings, Inc. (ALSN) Hit a 52 Week High, Can the Run Continue?
Shares of Allison Transmission (ALSN - Free Report) have been strong performers lately, with the stock up 7.8% over the past month. The stock hit a new 52-week high of $61.76 in the previous session. Allison Transmission has gained 5.6% since the start of the year compared to the 22.4% move for the Zacks Auto-Tires-Trucks sector and the 0.8% return for the Zacks Automotive - Original Equipment industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 25, 2023, Allison Transmission reported EPS of $1.76 versus consensus estimate of $1.72.
For the current fiscal year, Allison Transmission is expected to post earnings of $7.03 per share on $3.02 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $7.62 per share on $3.03 billion in revenues. This represents a year-over-year change of 1.32% and 0.54%, respectively.
Valuation Metrics
Allison Transmission may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Allison Transmission has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 8.7X current fiscal year EPS estimates, which is not in-line with the peer industry average of 11.7X. On a trailing cash flow basis, the stock currently trades at 8.2X versus its peer group's average of 7.2X. Additionally, the stock has a PEG ratio of 1.25. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Allison Transmission currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Allison Transmission fits the bill. Thus, it seems as though Allison Transmission shares could still be poised for more gains ahead.
How Does ALSN Stack Up to the Competition?
Shares of ALSN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Gentex Corporation (GNTX - Free Report) . GNTX has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of D.
Earnings were strong last quarter. Gentex Corporation beat our consensus estimate by 13.64%, and for the current fiscal year, GNTX is expected to post earnings of $2.16 per share on revenue of $2.51 billion.
Shares of Gentex Corporation have gained 4.1% over the past month, and currently trade at a forward P/E of 15.57X and a P/CF of 19X.
The Automotive - Original Equipment industry may rank in the bottom 59% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for ALSN and GNTX, even beyond their own solid fundamental situation.