When you look at NYSE:ALSN, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Last update: Aug 21, 2024

Our stock screening tool has pinpointed ALLISON TRANSMISSION HOLDING (NYSE:ALSN) as an undervalued stock. NYSE:ALSN maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Unpacking NYSE:ALSN's Valuation Rating

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 11.18.
Compared to the rest of the industry, the Price/Earnings ratio of ALSN indicates a rather cheap valuation: ALSN is cheaper than 86.92% of the companies listed in the same industry.
ALSN is valuated cheaply when we compare the Price/Earnings ratio to 29.62, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 9.45, the valuation of ALSN can be described as reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ALSN indicates a rather cheap valuation: ALSN is cheaper than 86.92% of the companies listed in the same industry.
ALSN is valuated cheaply when we compare the Price/Forward Earnings ratio to 20.91, which is the current average of the S&P500 Index.
Based on the Enterprise Value to EBITDA ratio, ALSN is valued cheaply inside the industry as 80.77% of the companies are valued more expensively.
90.77% 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.
A more expensive valuation may be justified as ALSN's earnings are expected to grow with 12.73% in the coming years.

Exploring NYSE:ALSN's Profitability

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:

Looking at the Return On Assets, with a value of 13.21%, ALSN belongs to the top of the industry, outperforming 89.23% of the companies in the same industry.
With an excellent Return On Equity value of 46.09%, ALSN belongs to the best of the industry, outperforming 96.15% of the companies in the same industry.
ALSN has a Return On Invested Capital of 16.56%. This is amongst the best in the industry. ALSN outperforms 89.23% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ALSN is above the industry average of 11.26%.
The last Return On Invested Capital (16.56%) for ALSN is above the 3 year average (15.20%), which is a sign of increasing profitability.
The Profit Margin of ALSN (21.95%) is better than 98.46% of its industry peers.
Looking at the Operating Margin, with a value of 30.30%, ALSN belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
With an excellent Gross Margin value of 47.75%, ALSN belongs to the best of the industry, outperforming 90.77% of the companies in the same industry.

Assessing Health Metrics for NYSE:ALSN

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:ALSN has earned a 7 out of 10:

ALSN has a debt to FCF ratio of 3.53. This is a good value and a sign of high solvency as ALSN would need 3.53 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 3.53, ALSN is doing good in the industry, outperforming 66.15% of the companies in the same industry.
A Current Ratio of 2.78 indicates that ALSN has no problem at all paying its short term obligations.
With a decent Current ratio value of 2.78, ALSN is doing good in the industry, outperforming 70.77% of the companies in the same industry.
ALSN has a Quick Ratio of 2.19. This indicates that ALSN is financially healthy and has no problem in meeting its short term obligations.
The Quick ratio of ALSN (2.19) is better than 76.92% of its industry peers.

Unpacking NYSE:ALSN's Growth Rating

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:ALSN scores a 5 out of 10:

The Earnings Per Share has grown by an nice 14.24% over the past year.
The Earnings Per Share has been growing by 9.25% on average over the past years. This is quite good.
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.

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

Our latest full fundamental report of ALSN contains the most current fundamental analsysis.

Disclaimer

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.