Allison Transmission Holdings Inc. (ALSN) is a leading designer and manufacturer of fully automatic transmissions for medium and heavy-duty commercial vehicles and medium and heavy-tactical US defense vehicles. Their strong OEM relationships and high barriers to entry provide a robust foundation for sustained market leadership, notes Kelley Wright, editor of IQ Trends.
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The company also offers electrified propulsion systems globally, serving markets in North America, Asia, Europe, South America, and Africa. Allison’s products are used in various applications, including on-highway vehicles such as distribution and refuse trucks, construction and emergency vehicles, buses, and motorhomes.
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ALSN’s transmissions and propulsion systems are recognized for their performance, reliability, and fuel efficiency. Allison also sells parts, support equipment, and engineering services to OEMs, distributors, and the US government. With a strong global presence, Allison maintains a network of approximately 1,600 independent distributors and dealer locations worldwide.
ALSN’s value lies in its market-leading position as the largest global manufacturer of fully automatic transmissions for medium and heavy-duty vehicles. The company’s extensive product range, including both traditional and emerging electrified propulsion systems, positions it well to meet diverse market demands.
Another positive for ALSN was its acquisition of Dana Inc.’s (DAN) Off-Highway business. That should strategically expand its core markets and create long-term value for shareholders, not to mention extend its multi-year earnings growth streak.
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The ROIC, FCFY, and P/EBV are 19%, 7%, and 0.8 respectively. Economic Earnings = $5.69 vs $8.79 reported. Economic Book Value = $103.05 per share. Ten-thousand dollars invested five years ago is worth approximately $31,753 now.
Recommended Action: Buy ALSN.
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