Allison (ALSN) to Propel US Army’s HERCULES Prototype Vehicles

Allison Transmission Holdings ALSN recently announced that it will provide the X1100 TM-5B propulsion solution for the U.S. Army’s new M88A3 HERCULES (Heavy Equipment Recovery Combat Utility Lift and Evacuation System) prototype vehicle.

This initiative is in line with the Army’s continued investments in combat preparedness and fleet modernization. The Army contributes more than $37 million in engineering design, development, fabrication, testing and demonstration funds for Allison’s solution to be used in the prototype vehicles through 2023. The Army expects to embark on production in early 2024. The Army’s modernization program aims to regain single-vehicle recovery of its heaviest tracked vehicle by providing more efficient use of resources.

The X1100-5B is a reliable and durable propulsion system based on the renowned Abrams Main Battle Tank drivetrain solution. Also, Allison will provide a new, advanced electronic controls system and new final drive components to meet the needs of the recovery vehicle application.

The program underlines Allison’s long-term strategic relationship with the Army. The company’s partnership with the Department of Defense dates back to 1946 to develop propulsion solutions that function in the toughest conditions. Allison is known for engineering and manufacturing reliable and fully customizable propulsion solutions, which reduce customer downtime and increase the ability to accomplish mission objectives.

Regular product launches bode well for Allison’s long-term growth. FracTran, the firm’s next-generation hydraulic fracturing transmission, is bolstering the company’s global off-highway end markets. TerraTran, an innovative propulsion solution purpose-built for the global construction and mining markets, is also set to buoy ALSN’s prospects. Its efforts toward innovation through the 3414 Regional Haul Series’ fully automatic transmission and development of products catering to electrification and fuel-cell markets for commercial vehicles augur well.

The launch of 100S and 130D e-axles has enriched Allison’s eGen Power portfolio. The accelerated development in its eGen Power family has set the unit for an overhaul. The company is preparing to announce strategic partnerships involving the eGen electric axles, as these will tap the immense growth potential of the unit, which will be a springboard for the company as well.

Shares of ALSN have lost 7.6% over the past year compared with its industry’s 46.4% decline.

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Zacks Rank & Other Key Picks

ALSN carries a Zacks Rank #2 (Buy), currently.

Some other top-ranked players in the auto space are BorgWarner BWA, LKQ Corporation LKQ and Standard Motor Products SMP, each carrying a Zacks Rank #2, currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BorgWarner has an expected earnings growth rate of 24% for 2023. The Zacks Consensus Estimate for current-year earnings has been constant in the past 30 days.

BorgWarner’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. BWA pulled off a trailing four-quarter earnings surprise of 33.1%, on average. The stock has declined 29.6% over the past year.

LKQ has an expected earnings growth rate of 6.3% for 2023. The Zacks Consensus Estimate for current-year earnings has been revised 0.25% upward in the past 30 days.

LKQ’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. LKQ pulled off a trailing four-quarter earnings surprise of 23.55%, on average. The stock has gained 0.6% in the past year.

Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has increased 2.1% over the past year.

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