NYSE:ALSN is an undervalued gem with solid fundamentals.

Last update: Jul 30, 2024

Our stock screener has spotted ALLISON TRANSMISSION HOLDING (NYSE:ALSN) as an undervalued stock with solid fundamentals. NYSE:ALSN shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Assessing 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 8 out of 10:

With a Price/Earnings ratio of 11.36, the valuation of ALSN can be described as very reasonable.
Based on the Price/Earnings ratio, ALSN is valued cheaper than 86.82% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 24.50, ALSN is valued rather cheaply.
The Price/Forward Earnings ratio is 9.60, which indicates a very decent valuation of ALSN.
Based on the Price/Forward Earnings ratio, ALSN is valued cheaper than 89.92% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ALSN to the average of the S&P500 Index (20.69), we can say ALSN is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, ALSN is valued cheaply inside the industry as 81.40% of the companies are valued more expensively.
ALSN's Price/Free Cash Flow ratio is rather cheap when compared to the industry. ALSN is cheaper than 90.70% of the companies in the same industry.
ALSN has an outstanding profitability rating, which may justify a higher PE ratio.
ALSN's earnings are expected to grow with 12.73% in the coming years. This may justify a more expensive valuation.

Analyzing Profitability Metrics

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:ALSN scores a 8 out of 10:

The Return On Assets of ALSN (13.29%) is better than 88.37% of its industry peers.
Looking at the Return On Equity, with a value of 50.07%, ALSN belongs to the top of the industry, outperforming 96.12% of the companies in the same industry.
The Return On Invested Capital of ALSN (16.65%) is better than 89.15% of its industry peers.
ALSN had an Average Return On Invested Capital over the past 3 years of 15.20%. This is above the industry average of 11.14%.
The last Return On Invested Capital (16.65%) for ALSN is above the 3 year average (15.20%), which is a sign of increasing profitability.
The Profit Margin of ALSN (21.80%) is better than 98.45% of its industry peers.
The Operating Margin of ALSN (29.94%) is better than 100.00% of its industry peers.
ALSN's Gross Margin of 47.84% is amongst the best of the industry. ALSN outperforms 92.25% of its industry peers.

Health Insights: NYSE:ALSN

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:ALSN was assigned a score of 6 for health:

ALSN has a debt to FCF ratio of 3.69. This is a good value and a sign of high solvency as ALSN would need 3.69 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 3.69, ALSN is doing good in the industry, outperforming 63.57% of the companies in the same industry.
A Current Ratio of 2.51 indicates that ALSN has no problem at all paying its short term obligations.
With a decent Current ratio value of 2.51, ALSN is doing good in the industry, outperforming 65.12% of the companies in the same industry.
ALSN has a better Quick ratio (1.95) than 74.42% of its industry peers.

Looking at the Growth

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:

The Earnings Per Share has grown by an nice 14.24% over the past year.
ALSN shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 9.25% yearly.
Looking at the last year, ALSN shows a quite strong growth in Revenue. The Revenue has grown by 9.61% in the last year.
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.

More Decent Value stocks can be found in our Decent Value screener.

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

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.