In a market where value is scarce, NYSE:ALSN offers a refreshing opportunity with its solid fundamentals.

Last update: Dec 5, 2023

Our stock screening tool has pinpointed ALLISON TRANSMISSION HOLDING (NYSE:ALSN) as an undervalued stock option. NYSE:ALSN retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

How We Gauge Valuation for NYSE:ALSN

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:ALSN has achieved a 9 out of 10:

The Price/Earnings ratio is 7.82, which indicates a rather cheap valuation of ALSN.
Based on the Price/Earnings ratio, ALSN is valued cheaper than 94.66% of the companies in the same industry.
ALSN is valuated cheaply when we compare the Price/Earnings ratio to 25.02, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 7.27, the valuation of ALSN can be described as very cheap.
ALSN's Price/Forward Earnings ratio is rather cheap when compared to the industry. ALSN is cheaper than 96.18% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 20.08. ALSN is valued rather cheaply when compared to this.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ALSN indicates a rather cheap valuation: ALSN is cheaper than 86.26% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ALSN is valued cheaply inside the industry as 90.08% of the companies are valued more expensively.
ALSN's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of ALSN may justify a higher PE ratio.
A more expensive valuation may be justified as ALSN's earnings are expected to grow with 17.71% in the coming years.

Assessing Profitability for NYSE:ALSN

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:ALSN, the assigned 8 is a significant indicator of profitability:

ALSN's Return On Assets of 12.91% is amongst the best of the industry. ALSN outperforms 90.08% of its industry peers.
With an excellent Return On Equity value of 54.39%, ALSN belongs to the best of the industry, outperforming 99.24% of the companies in the same industry.
The Return On Invested Capital of ALSN (15.77%) is better than 88.55% of its industry peers.
ALSN had an Average Return On Invested Capital over the past 3 years of 12.92%. This is above the industry average of 10.32%.
The 3 year average ROIC (12.92%) for ALSN is below the current ROIC(15.77%), indicating increased profibility in the last year.
The Profit Margin of ALSN (21.63%) is better than 98.47% of its industry peers.
With an excellent Operating Margin value of 29.75%, ALSN belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
ALSN has a Gross Margin of 48.25%. This is amongst the best in the industry. ALSN outperforms 93.89% of its industry peers.

Health Analysis for NYSE:ALSN

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:ALSN has received a 5 out of 10:

ALSN has a Debt to FCF ratio of 4.14. This is in the better half of the industry: ALSN outperforms 64.12% of its industry peers.
A Current Ratio of 2.41 indicates that ALSN has no problem at all paying its short term obligations.
ALSN has a Current ratio of 2.41. This is in the better half of the industry: ALSN outperforms 63.36% of its industry peers.
ALSN's Quick ratio of 1.86 is fine compared to the rest of the industry. ALSN outperforms 75.57% of its industry peers.

Assessing Growth Metrics for NYSE:ALSN

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:ALSN has achieved a 6 out of 10:

ALSN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 36.63%, which is quite impressive.
ALSN shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.97% yearly.
ALSN shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 10.50%.
ALSN is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 12.52% yearly.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

Check the latest full fundamental report of ALSN for a complete fundamental analysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.