Allison Transmission (NYSE:ALSN) Releases Quarterly Earnings Results, Beats Expectations By $0.58 EPS

Allison Transmission (NYSE:ALSN) announced its quarterly earnings results on Monday. The auto parts company reported $2.90 earnings per share (EPS) for the quarter, beating the consensus estimate of $2.32 by $0.58, FiscalAI reports. Allison Transmission had a net margin of 12.02% and a return on equity of 38.18%. The firm had revenue of $1.53 billion for the quarter, compared to analyst estimates of $1.47 billion.

Here are the key takeaways from Allison Transmission’s conference call:

• Third-quarter net sales rose 121% year over year to $1.534 billion, including $653 million from the Allison Off-Highway acquisition and a 27% increase in the legacy Allison Transmission business. Adjusted EBITDA increased 56% to $400 million, while adjusted free cash flow rose 51% to $278 million.
• Allison raised its full-year 2026 guidance for revenue, earnings, and cash flow for the second consecutive quarter, now expecting $5.975 billion-$6.075 billion of sales and $850 million-$900 million of adjusted free cash flow. Management expects the Off-Highway acquisition to be accretive to 2026 net income and EPS despite approximately $125 million of one-time pre-tax costs.
• Demand was particularly strong in North American on-highway markets, where quarterly sales reached a record $462 million, up 41% year over year. Management cited pent-up replacement demand in medium-duty trucks, robust Class 8 vocational demand, and a defense order book that is nearly full for 2027.
• The combined company is pursuing an integrated, energy-agnostic propulsion portfolio spanning conventional, hybrid, and electric products, with opportunities to capture more content per vehicle, cross-sell across customers, and generate at least $120 million in identified synergies. Management also sees additional margin opportunities from volume growth, cost reductions, and pricing.
• Raw-material inflation, particularly for steel and aluminum, remains a meaningful margin headwind, while geopolitical uncertainty continues to suppress industrial and agricultural demand in the Off-Highway business. Management also said high-voltage electrification adoption is not accelerating, with current demand concentrated in lower-voltage applications.

Allison Transmission Price Performance

ALSN traded up $4.51 during trading on Monday, reaching $112.56. The stock had a trading volume of 1,305,638 shares, compared to its average volume of 915,693. The stock has a market cap of $9.29 billion, a PE ratio of 17.89, a PEG ratio of 0.57 and a beta of 0.98. Allison Transmission has a one year low of $78.19 and a one year high of $137.62. The business has a 50-day moving average of $117.78 and a 200-day moving average of $118.28. The company has a debt-to-equity ratio of 2.07, a quick ratio of 1.17 and a current ratio of 1.81.

Allison Transmission Announces Dividend

The firm also recently declared a quarterly dividend, which was paid on Monday, August 31st. Stockholders of record on Friday, August 21st were given a dividend of $0.29 per share. This represents a $1.16 dividend on an annualized basis and a dividend yield of 1.0%. The ex-dividend date was Friday, August 21st. Allison Transmission’s dividend payout ratio (DPR) is 18.44%.

Analysts Set New Price Targets

ALSN has been the subject of several research analyst reports. Zacks Research upgraded Allison Transmission from a “hold” rating to a “strong-buy” rating in a research report on Monday, October 5th. JPMorgan Chase & Co. reduced their price objective on Allison Transmission from $145.00 to $142.00 and set a “neutral” rating for the company in a report on Thursday, October 8th. Morgan Stanley upped their target price on Allison Transmission from $126.00 to $130.00 and gave the company an “equal weight” rating in a research report on Friday, July 17th. Freedom Broker assumed coverage on shares of Allison Transmission in a research note on Friday, October 2nd. They issued a “buy” rating and a $144.00 price target on the stock. Finally, Wells Fargo & Company cut their price target on Allison Transmission from $137.00 to $120.00 and set an “equal weight” rating on the stock in a research note on Thursday, October 8th. Two analysts have rated the stock with a Strong Buy rating, four have issued a Buy rating and three have issued a Hold rating to the company’s stock. Based on data from MarketBeat, the company presently has a consensus rating of “Moderate Buy” and a consensus price target of $131.57.

Insider Buying and Selling

In other news, CEO David Graziosi sold 26,708 shares of the firm’s stock in a transaction that occurred on Friday, August 21st. The stock was sold at an average price of $132.97, for a total value of $3,551,362.76. Following the completion of the transaction, the chief executive officer owned 304,843 shares in the company, valued at $40,534,973.71. This trade represents a 8.06% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available through this hyperlink. Also, insider Eric Scroggins sold 1,050 shares of the stock in a transaction on Tuesday, August 11th. The shares were sold at an average price of $125.00, for a total value of $131,250.00. Following the sale, the insider owned 16,604 shares in the company, valued at approximately $2,075,500. This represents a 5.95% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. 1.10% of the stock is currently owned by company insiders.

Allison Transmission Company Profile

Allison Transmission, Inc designs and manufactures propulsion solutions for commercial, defense and off-highway vehicles. The company is best known for its fully automatic transmissions, which are used in applications including refuse collection, construction, distribution, emergency services, public transportation and mining.

Its product portfolio also includes electric and hybrid-electric propulsion systems, including the eGen Power electric axle and other electrification technologies.