Allison Transmission (ALSN): Assessing Valuation Following Dana Off-Highway Acquisition

Allison Transmission Holdings (ALSN) has had a mixed run lately, with short-term swings but also strong longer-term performance. Investors are watching how the company’s fundamentals stack up after several months of stock underperformance.

See our latest analysis for Allison Transmission Holdings.

Although Allison Transmission’s share price has pulled back over the past several months, with a year-to-date decline of nearly 24%, long-term investors have seen strong gains as the company delivered a total shareholder return of more than 130% over the past three years. This suggests that recent weakness may be more about shifting sentiment than fundamentals.

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With the stock trading at a significant discount to analyst targets and long-term returns still strong, investors must ask whether Allison Transmission is undervalued at current levels or if future growth is already reflected in the price.

Most Popular Narrative: 21.7% Undervalued

Allison Transmission Holdings is trading well below the narrative fair value, with the story pointing to a meaningful gap from its recent close. The most widely followed view puts the stock’s potential far above current market sentiment, setting the stage for further debate.

The recently announced acquisition of Dana's Off-Highway business materially expands Allison's global footprint, diversifies its end markets to include agriculture and construction, and is expected to drive significant operational and cost synergies ($120 million annual run rate), supporting both revenue growth and margin enhancement over the next 4 years.

Read the complete narrative.

Want to uncover which bold growth levers shape this standout price target? There is a fascinating blend of margin shifts and anticipated revenue acceleration built into this narrative. Ready to see the assumptions that power the gap beyond the headlines?

Result: Fair Value of $104.89 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, accelerating electrification and ongoing integration challenges from recent acquisitions remain key risks that could hinder Allison's future growth narrative.

Find out about the key risks to this Allison Transmission Holdings narrative.

Build Your Own Allison Transmission Holdings Narrative

If you see the story differently or want a data-driven perspective of your own, dive in and create your personal narrative in just a few minutes, then Do it your way.

A great starting point for your Allison Transmission Holdings research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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