Allison Transmission Holdings Inc. Common Stock (ALSN)

FairStock Score: 57/100 — STEADY

Key Financials

Strengths

• Generates $467 million in annual free cash flow (4.1% yield on market cap)
• High return on equity of 35.4% demonstrating efficient capital deployment

Concerns

• Trades significantly above Graham Number ($61) with negative 123% margin of safety—limited downside protection
• Revenue declining at 7.4% year-over-year signals potential demand weakness or market share loss

AI Analysis

Allison Transmission Holdings Inc. Common Stock is a mid-cap consumer cyclical company valued at $11.3 billion. The business generates $3.0 billion in annual revenue with a 3.3% net margin and $467 million in free cash flow. From a quality standpoint, Allison shows solid Piotroski F-Score of 6/9 and Altman Z-Score of 2.2 in the grey zone. On valuation, the stock is reasonably priced at 18.6x earnings, with trades far above its Graham Number ($61) with no margin of safety. Growth dynamics show revenue growing at -7.4% and profit growth of -43.4%. Our composite FairStock Score of 57/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $467 million in annual free cash flow (4.1% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the consumer cyclical space. Sluggish -7% growth in a large-cap company leaves the stock vulnerable to de-rating if the market rotates toward higher-growth opportunities.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer