In a market where value is scarce, ALLISON TRANSMISSION HOLDING (NYSE:ALSN) offers a refreshing opportunity with its solid fundamentals.

Discover ALLISON TRANSMISSION HOLDING (NYSE:ALSN), an undervalued stock highlighted by our stock screener. ALSN showcases solid financial health and profitability while maintaining an appealing valuation. We'll explore the details.

Analyzing Valuation Metrics

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of ALSN, the assigned 8 reflects its valuation:

• With a Price/Earnings ratio of 10.33, the valuation of ALSN can be described as very reasonable.
• ALSN's Price/Earnings ratio is rather cheap when compared to the industry. ALSN is cheaper than 86.72% of the companies in the same industry.
• Compared to an average S&P500 Price/Earnings ratio of 27.63, ALSN is valued rather cheaply.
• The Price/Forward Earnings ratio is 9.68, which indicates a very decent valuation of ALSN.
• Based on the Price/Forward Earnings ratio, ALSN is valued cheaply inside the industry as 91.41% of the companies are valued more expensively.
• When comparing the Price/Forward Earnings ratio of ALSN to the average of the S&P500 Index (20.85), we can say ALSN is valued rather cheaply.
• Based on the Enterprise Value to EBITDA ratio, ALSN is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of ALSN indicates a rather cheap valuation: ALSN is cheaper than 85.16% of the companies listed in the same industry.
• ALSN has an outstanding profitability rating, which may justify a higher PE ratio.

Assessing Profitability for ALSN

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. ALSN was assigned a score of 9 for profitability:

• With an excellent Return On Assets value of 13.70%, ALSN belongs to the best of the industry, outperforming 92.19% of the companies in the same industry.
• ALSN has a better Return On Equity (44.28%) than 96.09% of its industry peers.
• ALSN has a Return On Invested Capital of 16.73%. This is amongst the best in the industry. ALSN outperforms 89.06% of its industry peers.
• Measured over the past 3 years, the Average Return On Invested Capital for ALSN is significantly above the industry average of 10.75%.
• The 3 year average ROIC (16.17%) for ALSN is below the current ROIC(16.73%), indicating increased profibility in the last year.
• ALSN's Profit Margin of 22.67% is amongst the best of the industry. ALSN outperforms 97.66% of its industry peers.
• ALSN has a better Operating Margin (30.76%) than 100.00% of its industry peers.
• ALSN's Gross Margin of 47.41% is amongst the best of the industry. ALSN outperforms 89.06% of its industry peers.

Evaluating Health: ALSN

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. ALSN scores a 7 out of 10:

• The Debt to FCF ratio of ALSN is 3.65, which is a good value as it means it would take ALSN, 3.65 years of fcf income to pay off all of its debts.
• With a decent Debt to FCF ratio value of 3.65, ALSN is doing good in the industry, outperforming 60.16% of the companies in the same industry.
• ALSN has a Current Ratio of 3.04. This indicates that ALSN is financially healthy and has no problem in meeting its short term obligations.
• ALSN has a better Current ratio (3.04) than 75.00% of its industry peers.
• ALSN has a Quick Ratio of 2.42. This indicates that ALSN is financially healthy and has no problem in meeting its short term obligations.
• ALSN has a better Quick ratio (2.42) than 81.25% of its industry peers.

Analyzing Growth Metrics

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. ALSN was assigned a score of 4 for growth:

• The Earnings Per Share has grown by an nice 11.69% over the past year.
• The Earnings Per Share has been growing by 11.10% on average over the past years. This is quite good.

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

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

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.