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ALSN Announces New Share Repurchases of Up to $1 Billion

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Price movement

Allison Transmission Holdings (ALSN) has a market cap of $5.3 billion. It rose 3.1% to close at $31.89 per share on November 16, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 6.3%, 15.9%, and 26.0%, respectively, on the day.

ALSN is trading 10.1% above its 20-day moving average, 13.1% above its 50-day moving average, and 17.6% above its 200-day moving average.

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Related ETF and peers

The Guggenheim Mid-Cap Core ETF (CZA) invests 0.59% of its holdings in Allison Transmission. The ETF tracks the Zacks Mid-Cap Core Index, a proprietary selected portfolio of 100 mid-cap stocks that seeks to outperform pure market cap indexes. The YTD price movement of CZA was 11.9% on November 16.

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

  • Caterpillar (CAT) — $54.6 billion
  • Cummins (CMI) — $23.0 billion
  • Thor Industries (THO) — $4.5 billion

Latest news on ALSN

In a press release on November 16, 2016, ALSN reported, “The board of directors has authorized a new stock repurchase program for up to $1 billion of its common stock. The Company anticipates repurchasing its common stock under the stock repurchase program from time to time through Dec. 31, 2019. The Company expects to complete its current $500 million stock repurchase program by Dec. 31, 2016.”

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Performance of Allison Transmission in 3Q16

Allison Transmission reported 3Q16 net sales of $434.3 million, a fall of 11.9% compared to its net sales of $493.0 million in 3Q15. The company’s gross profit margin contracted 80 basis points, and its operating margin expanded 120 basis points in 3Q16 compared to 3Q15.

Its net income fell to $44.6 million in 3Q16, compared to $46.5 million in 3Q15. It reported EPS (earnings per share) of $0.27 in both 3Q16 and 3Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $150.5 million in 3Q16, a fall of 13.6% compared to 3Q15.

ALSN’s cash and cash equivalents fell 34.5%, and its inventories rose 10.2% in 3Q16 compared to 4Q15. It reported adjusted free cash flow of $115.5 million in 3Q16, a fall of 21.8% compared to 3Q15.

Projections

Allison Transmission has made the following projections for 2016:

  • net sales fall of 8.5%–9.5%
  • adjusted EBITDA margin of 34.0%–35.0%
  • adjusted free cash flow of $435 million–$455 million
  • capital expenditure of $70 million–$75 million
  • cash income tax of $10 million–$15 million

Next, we’ll look at Apple (AAPL).

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