Critical Contrast: Workhorse Group (NASDAQ:WKHS) versus Allison Transmission (NYSE:ALSN)

Allison Transmission (NYSE:ALSN) and Workhorse Group (NASDAQ:WKHS) are both auto/tires/trucks companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, risk and valuation.

Profitability

This table compares Allison Transmission and Workhorse Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allison Transmission	22.78%	40.46%	12.93%
Workhorse Group	-606.64%	-232.69%	-71.18%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Allison Transmission and Workhorse Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allison Transmission	2	7	0	1	2.00
Workhorse Group	1	0	0	0	1.00

Allison Transmission currently has a consensus target price of $95.13, suggesting a potential downside of 9.75%. Given Allison Transmission’s stronger consensus rating and higher possible upside, analysts clearly believe Allison Transmission is more favorable than Workhorse Group.

Earnings & Valuation

This table compares Allison Transmission and Workhorse Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allison Transmission	$3.23 billion	2.72	$731.00 million	$8.16	12.92
Workhorse Group	$6.62 million	1.86	-$101.79 million	($85.96)	-0.07

Allison Transmission has higher revenue and earnings than Workhorse Group. Workhorse Group is trading at a lower price-to-earnings ratio than Allison Transmission, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

96.9% of Allison Transmission shares are held by institutional investors. Comparatively, 16.0% of Workhorse Group shares are held by institutional investors. 1.2% of Allison Transmission shares are held by insiders. Comparatively, 1.9% of Workhorse Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Allison Transmission has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, Workhorse Group has a beta of 2.41, indicating that its share price is 141% more volatile than the S&P 500.

Summary

Allison Transmission beats Workhorse Group on 12 of the 14 factors compared between the two stocks.

About Allison Transmission

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells fully automatic transmissions for medium- and heavy-duty commercial vehicles and medium- and heavy-tactical U.S. defense vehicles, and electrified propulsion systems worldwide. It provides commercial-duty on-highway, off-highway and defense fully automatic transmissions, and electric hybrid and fully electric systems. The company offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. It provides its transmissions and electric propulsion solutions under the Allison Transmission brand name; and remanufactured transmissions under the ReTran brand name. The company also sells branded replacement parts, support equipment, aluminum die cast components, and other products necessary to service the installed base of vehicles utilizing its solutions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. It serves customers through an independent network of approximately 1,600 independent distributor and dealer locations. The company was formerly known as Clutch Holdings, Inc. Allison Transmission Holdings, Inc. was founded in 1915 and is headquartered in Indianapolis, Indiana.

About Workhorse Group

Workhorse Group Inc., a technology company, engages in design, manufacture, and sale of zero-emission commercial vehicles in the United States. The company offers commercial vehicles under the Workhorse brand. The company was formerly known as AMP Holding Inc. and changed its name to Workhorse Group Inc. in April 2015. Workhorse Group Inc. was founded in 2007 and is headquartered in Sharonville, Ohio.