Assessing Allison Transmission (ALSN) Valuation Following Dana Off-Highway Acquisition and Ongoing Sector Shifts

Allison Transmission Holdings (ALSN) has seen its stock showing relatively muted movements over the past few weeks, with small changes in both the week and month. Investors seem to be weighing the company's fundamentals for direction.

See our latest analysis for Allison Transmission Holdings.

While Allison Transmission’s share price has been steady recently, momentum has faded compared to a year ago. The stock is down 24% year-to-date, and its one-year total shareholder return sits at -28.9%. This marks a sharp contrast to impressive long-term gains of 94.9% over three years and 122.4% over five.

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This raises an important question for investors: with shares trading at a discount to analyst targets and recent fundamentals showing solid growth, is Allison Transmission undervalued, or has the market already priced in any future upside?

Most Popular Narrative: 19.8% Undervalued

Allison Transmission Holdings closed at $81.73, which sits well below the narrative’s fair value estimate of $101.89. This valuation gap reflects sharply higher revenue growth assumptions, tempered by lower expected margins and a more conservative risk premium.

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 the blueprint fueling this valuation? The key driver is a bold turnaround triggered by global expansion and high-stakes cost synergies, not just modest profit forecasts. Discover which pivotal assumptions are pushing expectations above the current share price—are they achievable or a risk waiting to unfold?

Result: Fair Value of $101.89 (UNDERVALUED)

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

However, ongoing electrification across the industry and unexpected softness in North America's commercial truck market could quickly challenge Allison's bullish narrative.

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

Build Your Own Allison Transmission Holdings Narrative

If you like to dive into the numbers yourself or question the consensus, you can shape your own perspective in just a few minutes. So why not Do it your way?

A great starting point for your Allison Transmission Holdings research is our analysis highlighting 3 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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