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Allison Transmission’s Bottom Line Rose in 2Q16

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Nov. 20 2020, Updated 11:07 a.m. ET

Price movement

Allison Transmission Holdings (ALSN) has a market cap of $5.2 billion. It rose by 0.96% to close at $30.41 per share on July 27, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 1.8%, 14.5%, and 18.9%, respectively, on the same day. ALSN is trading 5.7% above its 20-day moving average, 7.6% above its 50-day moving average, and 15.0% above its 200-day moving average.

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Related ETF and peers

The Guggenheim Mid-Cap Core ETF (CZA) invests 0.66% of its holdings in Allison Transmission. The ETF tracks the Zacks Mid-Cap Core Index, a proprietary selected portfolio of 100 midcap stocks that seeks to outperform pure market-cap indexes. The YTD price movement of CZA was 9.8% on July 27.

The market caps of Allison Transmission’s competitors are as follows:

  • Caterpillar (CAT) — $49.5 billion
  • Cummins (CMI) — $21.1 billion
  • Thor Industries (THO) — $3.9 billion

Performance of Allison Transmission in 2Q16

Allison Transmission reported 2Q16 net sales of $474.9 million, a fall of 7.1% from the net sales of $511.0 million in 2Q15. The company’s gross profit margin rose by 3.2% and its operating income fell by 7.6% between 2Q15 and 2Q16.

Its net income and EPS (earnings per share) rose to $60.8 million and $0.36, respectively, in 2Q16, compared with $54.4 million and $0.30, respectively, in 2Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $173.3 million in 2Q16, a fall of 6.6% from fiscal 2Q15.

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ALSN’s cash and cash equivalents and inventories rose by 44.8% and 6.4%, respectively, between 4Q15 and 2Q16. Its current ratio and debt-to-equity ratio rose to 2.2x and 2.8x, respectively, in 2Q16, compared with 2.0x and 2.7x, respectively, in 4Q15. It reported adjusted free cash flow of $156.7 million in 2Q16, a rise of 13.3% over fiscal 2Q15.

Projections

The company has made the following projections for fiscal 2016:

  • net sales to decrease in the range of 9.5% to 10.5%
  • adjusted EBITDA margin in the range of 33.3% to 34.0%
  • adjusted free cash flow in the range of $415 million to $435 million
  • capital expenditures in the range of $65 million to $75 million
  • cash income tax in the range of $10 million to $15 million

For an ongoing analysis of this sector, please visit Market Realist’s Consumer Discretionary page.

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