A month has gone by since the last earnings report for Allison Transmission (ALSN Quick QuoteALSN - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Allison Transmission due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Allison Transmission Q2 Earnings Beat Estimates

Allison delivered second-quarter 2025 earnings of $2.29 per share, which beat the Zacks Consensus Estimate of $2.20 and rose 7.5% year over year. Quarterly revenues of $814 million fell 0.2% from the year-ago period's level but beat the Zacks Consensus Estimate of $794 million.

Segmental Performance

Allison Transmission segregates revenues in terms of end markets served, which are as follows:

In the reported quarter, net sales in the North America On-Highway end market fell 8.6% year over year to $417 million and missed the Zacks Consensus Estimate of $442 million. Lower demand for medium-duty trucks resulted in a sales slump.

The Outside North America On-Highway end market’s net sales of $142 million increased from $128 million generated in the corresponding quarter of 2024 due to higher demand in South America and Europe. The metric also beat the Zacks Consensus Estimate of $123 million.

Net sales in the Global Off-Highway end market plunged to $16 million from $23 million reported in the year-ago period and missed the Zacks Consensus Estimate of $18.45 million, amid softer demand from the energy, mining and construction sectors outside of North America.

In the reported quarter, net sales in the Defense end market rose 46.5% year over year to $63 million, driven by concentrated growth initiatives. The reported figure also beat the Zacks Consensus Estimate of $52 million. 

Net sales in the Service Parts, Support Equipment & Other end markets grew 6% year over year to $176 million in the quarter due to higher demand for service parts, added with price increases on certain products. The reported figure beat the Zacks Consensus Estimate of $162 million.

Financial Position

Allison Transmission saw a gross profit of $402 million, which increased from $394 million reported in the year-ago quarter, mainly driven by price increases on certain products.

Adjusted EBITDA in the quarter was $313 million, which increased from $301 million reported a year ago. 

Selling, general and administrative expenses in the quarter were $102 million, up 24.4% year over year. Engineering – research and development expenses decreased to $44 million from $49 million reported in the second quarter of 2024.

Allison Transmission had cash and cash equivalents of $778 million as of June 30, 2025, down from $781 million recorded as of Dec. 31, 2024. Long-term debt was $2.4 billion, unchanged from 2024-end levels.

Net cash provided by operating activities totaled $184 million. Adjusted free cash flow in the reported quarter totaled $153 million, up from $150 million generated in the year-ago period.

2025 Outlook Revised

Allison Transmission expects full-year 2025 net sales in the band of $3,075-$3,175 million compared with the previous expectation of $3,200-$3,300 million reported. Net income is expected in the band of $640-$680 million, down from the prior guidance of $735-$785 million. Adjusted EBITDA is estimated in the range of $1,130-$1,180 million, down from $1,170-$1,230 million expected earlier.

ALSN expects net cash provided by operating activities between $785 million and $835 million compared with the previous estimate of $800-$860 million. Capex is expected in the band of $165-$175 million. Adjusted free cash flow is estimated between $620 million and $660 million compared with the previous estimate of $635-$685 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -12.88% due to these changes.

VGM Scores

At this time, Allison Transmission has a subpar Growth Score of D, a score with the same score on the momentum front. However, the stock has a score of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Allison Transmission has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Allison Transmission belongs to the Zacks Automotive - Original Equipment industry. Another stock from the same industry, Lear (LEA Quick QuoteLEA - Free Report) , has gained 16.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2025.

Lear reported revenues of $6.03 billion in the last reported quarter, representing a year-over-year change of +0.3%. EPS of $3.47 for the same period compares with $3.60 a year ago.

Lear is expected to post earnings of $2.76 per share for the current quarter, representing a year-over-year change of -4.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.

Lear has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.