Despite its impressive fundamentals, NYSE:ALSN remains undervalued.

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.

Evaluating Valuation: 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 8 out of 10:

• ALSN is valuated reasonably with a Price/Earnings ratio of 11.02.
• Based on the Price/Earnings ratio, ALSN is valued cheaper than 88.46% of the companies in the same industry.
• Compared to an average S&P500 Price/Earnings ratio of 26.26, ALSN is valued rather cheaply.
• Based on the Price/Forward Earnings ratio of 10.65, the valuation of ALSN can be described as reasonable.
• Based on the Price/Forward Earnings ratio, ALSN is valued cheaply inside the industry as 91.54% of the companies are valued more expensively.
• ALSN's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.55.
• 82.31% of the companies in the same industry are more expensive than ALSN, based on the Enterprise Value to EBITDA ratio.
• 92.31% of the companies in the same industry are more expensive than ALSN, based on the Price/Free Cash Flow ratio.
• The excellent profitability rating of ALSN may justify a higher PE ratio.

Analyzing Profitability Metrics

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:ALSN, the assigned 8 is noteworthy for profitability:

• ALSN has a better Return On Assets (13.39%) than 88.46% of its industry peers.
• Looking at the Return On Equity, with a value of 54.58%, ALSN belongs to the top of the industry, outperforming 98.46% of the companies in the same industry.
• With an excellent Return On Invested Capital value of 16.63%, ALSN belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
• ALSN had an Average Return On Invested Capital over the past 3 years of 15.20%. This is above the industry average of 10.77%.
• The 3 year average ROIC (15.20%) for ALSN is below the current ROIC(16.63%), indicating increased profibility in the last year.
• ALSN has a better Profit Margin (22.17%) than 98.46% of its industry peers.
• ALSN has a Operating Margin of 30.28%. This is amongst the best in the industry. ALSN outperforms 100.00% of its industry peers.
• With an excellent Gross Margin value of 48.43%, ALSN belongs to the best of the industry, outperforming 93.08% of the companies in the same industry.

Understanding NYSE:ALSN's Health Score

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:ALSN has earned a 6 out of 10:

• ALSN has a debt to FCF ratio of 3.80. This is a good value and a sign of high solvency as ALSN would need 3.80 years to pay back of all of its debts.
• Looking at the Debt to FCF ratio, with a value of 3.80, ALSN is in the better half of the industry, outperforming 61.54% of the companies in the same industry.
• ALSN has a Current Ratio of 2.50. This indicates that ALSN is financially healthy and has no problem in meeting its short term obligations.
• The Current ratio of ALSN (2.50) is better than 65.38% of its industry peers.
• ALSN has a Quick ratio of 1.94. This is in the better half of the industry: ALSN outperforms 76.92% of its industry peers.

Assessing Growth Metrics for NYSE:ALSN

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:ALSN has received a 5 out of 10:

• ALSN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 34.54%, 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 9.25% yearly.
• ALSN shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 9.61%.
• When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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For an up to date full fundamental analysis you can check the fundamental report of ALSN

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.