Financial Review: Allison Transmission Holdings (ALSN) & Wabco Holdings (WBC)
Allison Transmission Holdings (NYSE: ALSN) and Wabco Holdings (NYSE:WBC) are both mid-cap auto/tires/trucks companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.
This is a summary of current ratings and target prices for Allison Transmission Holdings and Wabco Holdings, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Allison Transmission Holdings||2||6||4||0||2.17|
Allison Transmission Holdings currently has a consensus target price of $39.63, suggesting a potential upside of 12.06%. Wabco Holdings has a consensus target price of $141.36, suggesting a potential downside of 4.25%. Given Allison Transmission Holdings’ higher probable upside, research analysts plainly believe Allison Transmission Holdings is more favorable than Wabco Holdings.
Risk & Volatility
Allison Transmission Holdings has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, Wabco Holdings has a beta of 1.64, meaning that its share price is 64% more volatile than the S&P 500.
This table compares Allison Transmission Holdings and Wabco Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Allison Transmission Holdings||14.32%||31.27%||6.77%|
Institutional and Insider Ownership
97.5% of Wabco Holdings shares are held by institutional investors. 7.9% of Allison Transmission Holdings shares are held by company insiders. Comparatively, 0.8% of Wabco Holdings shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Allison Transmission Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 1.7%. Wabco Holdings does not pay a dividend. Allison Transmission Holdings pays out 33.7% of its earnings in the form of a dividend. Allison Transmission Holdings has raised its dividend for 4 consecutive years.
Valuation and Earnings
This table compares Allison Transmission Holdings and Wabco Holdings’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Allison Transmission Holdings||$1.98 billion||2.66||$707.40 million||$1.78||19.87|
|Wabco Holdings||$2.93 billion||2.70||$479.40 million||$6.00||24.61|
Allison Transmission Holdings has higher revenue, but lower earnings than Wabco Holdings. Allison Transmission Holdings is trading at a lower price-to-earnings ratio than Wabco Holdings, indicating that it is currently the more affordable of the two stocks.
Wabco Holdings beats Allison Transmission Holdings on 11 of the 17 factors compared between the two stocks.
Allison Transmission Holdings Company Profile
Allison Transmission Holdings, Inc. and its subsidiaries design and manufacture commercial and defense fully-automatic transmissions. The Company manufactures fully-automatic transmissions for medium- and heavy-duty commercial vehicles, and medium-and heavy-tactical United States defense vehicles. The Company’s transmissions are used in a range of applications, including on-highway trucks (distribution, refuse, construction, fire and emergency), buses (primarily school, transit and hybrid-transit), motorhomes, off-highway vehicles and equipment (energy, mining and construction) and defense vehicles (wheeled and tracked). The Company’s transmissions are sold under the Allison Transmission brand name and remanufactured transmissions are sold under the ReTran brand name. The Company has developed over 100 different models that were used in more than 2,500 different vehicle configurations and were compatible with over 500 combinations of engines, as of December 31, 2016.
Wabco Holdings Company Profile
WABCO Holdings Inc. is a supplier of electronic, mechanical, electro-mechanical and aerodynamic products for various manufacturers of commercial trucks, buses and trailers, as well as passenger cars. The Company engineers, develops, manufactures and sells braking, stability, suspension and transmission automation and air management systems primarily for commercial vehicles. Its products are pneumatic anti-lock braking systems, electronic braking systems, electronic stability control systems, brake controls, automated manual transmission systems, air disc brakes, and a range of conventional mechanical products, such as actuators, air compressors and air control valves for medium- and heavy-duty trucks, buses and trailers. The Company’s products also include air compressor and air processing/air management system; electronic and conventional air suspension systems; transmission automation; roll stability support; advanced driver assistance systems, and fleet management solutions.
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