Allison Transmission Holdings Inc. Common Stock (ALSN) fair value

ACCE thesis

Allison Transmission makes fully automatic transmissions for commercial vehicles, including medium and heavy-duty trucks, buses, and defense vehicles, and it has been pushing its electrified propulsion systems for hybrid and battery-electric applications. Its moat is an installed base built on specification relationships with OEMs, which makes switching costs high and gives it steady aftermarket and replacement demand. The 92.4% revenue growth figure in our data is far above what the core transmission business would produce organically, so it likely reflects an acquisition or a consolidation of a major step-change in the reported base, and that needs checking before anyone leans on it. The stock trades at 10.2 times forward earnings against 17.9 times trailing, which means the market expects earnings to rise sharply, and a 28.3% return on equity with a 19.1% operating margin shows the business is already highly profitable. The score of 66 out of 100 and the absence of index membership make this a name for a deeper look at what drove the revenue jump and whether the forward estimates hold.