Allison Transmission Holdings (ALSN) Could Be 15% Undervalued As $250 Million Defense Deal Lands

Simply Wall St.07-14

Allison Transmission Holdings (ALSN) has drawn fresh investor attention after securing a US$250 million contract to supply 4040 MX transmissions for BAE Systems Hägglunds’ CV90 MkIV infantry fighting ...

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The current US$115.98 share price reflects a year-to-date share price return of 17.22%, while the...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4532":"文艺复兴科技持仓","ALSN":"艾里逊变速箱控股公司","BK4149":"建筑机械与重型卡车"},"translate_title":"随着 2.5 亿美元国防交易达成，Allison Transmission Holdings (ALSN) 的估值可能被低估 15%","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ALSN":1.5},"content_text":"Allison Transmission Holdings (ALSN) has drawn fresh investor attention after securing a US$250 million contract to supply 4040 MX transmissions for BAE Systems Hägglunds’ CV90 MkIV infantry fighting vehicles. See our latest analysis for Allison Transmission Holdings. Alongside the new US$250 million defense contract, Allison Transmission Holdings has also been added to several S&P indices. The current US$115.98 share price reflects a year-to-date share price return of 17.22%, while the 5-year total shareholder return of 219.51% suggests longer-term momentum has been much stronger than the more recent 90-day share price decline of 9.57%. If this kind of contract-driven story has caught your eye, it can be useful to broaden your search using a curated list of power grid and infrastructure-related companies such as the 34 power grid technology and infrastructure stocks. Allison Transmission Holdings now sits at US$115.98 while analyst targets cluster around US$136.90 and some models point to a much lower intrinsic value. So where does fair value really lie after the contract news and index adds? AdvertisementMost Popular Narrative: 15% Undervalued With Allison Transmission Holdings last closing at $115.98 and the most followed narrative pointing to a fair value of $136.50, investors are weighing how much of the contract wins, index inclusions and acquisition story is already reflected in the price.  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. Curious what assumptions sit behind that fair value for Allison Transmission Holdings? The narrative leans on faster top line expansion, wider margins and a future earnings multiple that looks very different from where the stock trades today. The exact mix of revenue growth, profitability and discount rate is what makes the model tick, and that detail only shows up when you see the full narrative. Result: Fair Value of $136.50 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Allison Transmission Holdings still faces two key swing factors: faster electrification that could pressure traditional transmissions, and execution risk on the Dana Off Highway integration. Find out about the key risks to this Allison Transmission Holdings narrative. Next Steps Feeling torn between the risks and rewards around Allison Transmission Holdings? Act quickly, review the details for yourself and weigh up the 3 key rewards and 2 important warning signs. Looking for more investment ideas beyond Allison Transmission Holdings? If Allison Transmission Holdings has sharpened your interest, do not stop here. Broaden your watchlist using focused stock ideas that target quality, value and resilience.  Zero in on companies that pair attractive pricing with strong fundamentals by checking the 46 high quality undervalued stocks. Build a portfolio that prioritizes stability and capital protection by scanning the 80 resilient stocks with low risk scores. Get ahead of the crowd by spotting underfollowed quality stocks through the screener containing 20 high quality undiscovered gems.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n        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\n        financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n        Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n        Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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