Fundamental analysis: Allison Transmission Holdings, Inc. (ALSN)

Awarener score: 7.4

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Excellent), the business stability (Modest) and growth (Poor), and the company's inclination to return cash to the stockholders (Excellent).

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 4.0

Business has been shrinking. It's been below average when measured against peer companies.
Allison Transmission Holdings, Inc. business trend isn't so stable. The higher the stability, the lower the risk. It looks worse than most rivals.

Margins score: 8.7

ALSN profit margins -on goods and services sold- are usually good. They stand top-notch against rival companies.
Business profit on sales tends to be huge. It's top tier when measured against competitors.
Profits on sales made -available to repay debt and purchase properties- are usually very good. They remain impressive in relation to peers.
Earnings -before income taxes and interests on loans taken- tend to be excellent in relation to total revenues. They're still top-notch against similar companies.
Profits -before income taxes- are usually excellent considering total sales, and remain top tier when measured against rivals.
Total net profit tends to be excellent when confronted to sales. Company stands top tier when measured against comparable firms.

Growth score: 2.9

Allison Transmission Holdings, Inc. profit growth -on goods and services sold- has been almost stagnant. It's been in a weak position compared to competitors.
In recent years, earnings -on operations- have been shrinking, which has been worse than most comparable firms.
Profits -available to repay debt and purchase properties- tended to shrink, which compares substantially worse when measured against peer enterprises.
Earnings -before income taxes and interests on loans taken- tended to shrink. It turns to be in a very weak position compared to similar stocks.
In past years, growth on profits -before income taxes- was almost stagnant. It was somewhat worse than rivals.
In the previous years, growth on total net profit has been almost null, and below average when measured against peer companies.
Earnings per share have grown at a low rhythm in past years. It's been a slight improvement compared to industry peers.

Miscellaneous score: 6.3

ALSN had to pay sparse income taxes in relation to profits made in the past years. It's been well ranked against peers.
Research and development expenses consume a sparse portion of revenues. It's encouraging in relation to competitors.
The company grows sparsely in relation to research and development efforts. It stands close to average when compared to rival companies.

Profitability score: 10.0

Allison Transmission Holdings, Inc. usually gets huge returns on the resources it controls. It proves great when measured against peer firms.
The company normally gets huge proceeds -on the resources directly invested in the business-. They remain impressive in relation to similar companies.
Profitability -in relation to owned resources- is usually paramount. It ranks top tier when measured against competitors.
In the past, got huge returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's top tier when measured against comparable enterprises.

Usage of Funds score: 6.8

ALSN usually uses a modest portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments isn't too high. It stands top tier when measured against rival firms.
The company is usually replacing most of the property, plant, and equipment that gets old, and saving a little funds for something else, which is substantially worse when measured against industry peers.
In the past twelve months it paid run-of-the-mill dividends, considering the current stock price. It came somewhat worse than competitors.
Has somewhat increased dividend payments in the past years. Business prospects may have improved. The company has behaved rather normal in relation to similar firms.
Dividend payments usually represent a minor portion of genuine funds generation and are most likely safe. Sustainability looks better than most comparable companies.
The company usually significantly reduces the pool of investors, resulting in fewer mouths feeding on the pie of profits. It remains impressive in relation to peer enterprises.
Repurchase effectiveness metric is very complex. Run again in analytical mode if you 're interested in a technical explanation. It stands impressive in relation to rivals.
The company uses a large portion of genuine fund generation to reward investors, which can probably be sustained for as long as business doesn't turn sour. It still looks almost average when measured against competitors.

Balance Sheet score: 5.0

Allison Transmission Holdings, Inc. intangible assets (like brands and goodwill) represent a huge portion of resources controlled, according to accounting books. There could be major difficulties in liquidating them if the company ever gets in financial distress. It happens to be last-in-rank when measured against peer companies.
The company has roughly double short-term resources than short-term obligations. Liquidity concerns are normally not an issue. It turns to be close to average when compared to similar firms.
A substantial part of resources controlled were provided for with financial debt. Creditors have as many claims on the company as shareholders. The situation is somewhat risky. It remains worse than most rival firms.
Most controlled resources might be only slowly turned into cash and equivalents, which is risky. It looks last-in-rank when measured against rivals.
For every dollar of short-term obligations, the company has enough dollars in cash and short-term receivables. It's in good shape compared to peer firms.
For every dollar of short-term obligations, the company has almost another of cash and equivalents, which is somewhat better than similar enterprises.
Usually, sales are on a two-months credit. It still ranks more than average in relation to peers.
Normally has approximately somewhat more than two months of sales worth in inventory. It comes up as close to average when compared to competitors.
On average, it takes higher than four months from the purchase to charging customers. It happens to be well ranked against peers.
On average pays suppliers longer than two months after the purchase. It ranks below average when measured against industry peers.
The company pays its suppliers roughly two months before charging its customers, so there's some money invested in working capital. It's rather normal in relation to similar companies.
Net interest expenses consume a minor portion of usual business earnings, and are largely bearable. It stands slightly worse than rival firms.
Business earnings have usually been good when measured against loans taken. Cutting back reinvesting in the business, it could take less than three years to repay the obligations with current profitability. It ranks almost average when measured against comparable enterprises.
Revenues are modest in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. The more property, plant, and equipment used, the more the company must reinvest to fight obsolescence, which usually means less available funds for the shareholders in the long run. It looks close to average when compared to similar firms.
Resource exploitation is reasonable when yearly sales are considered. This metric is normally tied to the industry where the firm belongs. It's still mediocre against peer companies.

Valuation score: 6.7

Allison Transmission Holdings, Inc. looks cheap in relation to profits and financial position. It happens to be great when measured against competitors.
Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains a disappointment compared to peers.
In the past twelve months, the company generated excellent free funds in relation to the stock price, which stands better than most similar companies.
The company usually generates much more genuine funds to cover up for its business needs. Surplus cash may be used to repay loans, to eventually buy new businesses, or to reward investors. Considering the financial position and stock price, at the current price the share might be very interesting. It's still great when measured against industry firms.
In the past twelve months, the company has rewarded investors, considering both dividends and share on the pie of earnings. It came up excellent in relation to peer ventures.
The company is indebted, it should focus on loan repayment. It looks mediocre against similar enterprises.
Considering the past twelve months, traditional Price-to-Earnings relation looks cheap. Possible reasons are that the market might be betting current earnings will be hard to sustain through time, or that the company has very high fund needs, or a weak financial position, among others. If that isn't the case, the current stock price might be attractive. It ranks great when measured against peer companies.
Comparing the current stock price with the past twelve-months revenues gives a roughly two to one relationship. This is an important metric to check its evolution through time, and to compare to industry peers. It looks in a weak position compared to rival firms.
The relation between the stock price and accounting book value is really high, which may be good or bad depending on context. Run again in analytic mode if you want to dig deeper. The company remains worse than most peer firms.
In the past twelve months, the operating business earned great money when compared to the current stock price and financial position. It happens to be great when measured against industry peers.
In an alternate metric of bang for the buck, the company has usually shown an excellent earnings power ability when measured against the current stock price and financial position. Further analysis is recommended, as the stock might currently be undervalued. It's still impressive in relation to peer companies.

Total score: 6.3

Company at a glance: Allison Transmission Holdings, Inc. (ALSN)

Sector, industry: Consumer Cyclical, Auto Parts

Market Cap: 4.63 billions

Revenues TTM: 2.83 billions

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells commercial and defense fully-automatic transmissions for medium-and heavy-duty commercial vehicles, and medium-and heavy-tactical U.S. defense vehicles worldwide. It offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. The company markets its transmissions under the Allison Transmission brand name; and remanufactured transmissions under the ReTran brand name. It also sells branded replacement parts, support equipment, aluminum die cast components, and other products necessary to service the installed base of vehicles utilizing its transmissions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. The company serves customers through an independent network of approximately 1,400 independent distributor and dealer locations. The company was formerly known as Clutch Holdings, Inc. Allison Transmission Holdings, Inc. was founded in 1915 and is headquartered in Indianapolis, Indiana.