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Should You Buy Allison Transmission (ALSN) Ahead of Earnings?

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Investors are always looking for stocks that are poised to beat at earnings season and Allison Transmission Holdings, Inc. (ALSN - Free Report) may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report.

That is because Allison Transmission is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends underneath the surface for ALSN in this report.

In fact, the Most Accurate Estimate for the current quarter is currently at 65 cents per share for ALSN, compared to a broader Zacks Consensus Estimate of 60 cents per share. This suggests that analysts have very recently bumped up their estimates for ALSN, giving the stock a Zacks Earnings ESP of +8.02% heading into earnings season.

Allison Transmission Holdings, Inc. Price and EPS Surprise

Why is this Important?

A positive reading for the Zacks Earnings ESP has proven to be very powerful in producing both positive surprises, and outperforming the market. Our recent 10-year backtest shows that stocks that have a positive Earnings ESP and a Zacks Rank #3 (Hold) or better show a positive surprise nearly 70% of the time, and have returned over 28% on average in annual returns (see more Top Earnings ESP stocks here).

Given that ALSN has a Zacks Rank #3 and an ESP in positive territory, investors might want to consider this stock ahead of earnings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Clearly, recent earnings estimate revisions suggest that good things are ahead for Allison Transmission, and that a beat might be in the cards for the upcoming report.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>




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