Macquarie Rated Allison Transmission Holdings as ‘Neutral’

Price movement

Allison Transmission Holdings (ALSN) has a market cap of $5.7 billion. It rose 0.12% to close at $34.25 per share on December 13, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.41%, 10.2%, and 35.3%, respectively, on the same day.

ALSN is trading 3.8% above its 20-day moving average, 13.1% above its 50-day moving average, and 21.9% above its 200-day moving average.

Macquarie Rated Allison Transmission Holdings as ‘Neutral’

Related ETF and peers

The Guggenheim Mid-Cap Core ETF (CZA) invests 0.59% of its holdings in Allison Transmission. The YTD price movement of CZA was 16.4% on December 13.

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

  • Caterpillar (CAT) — $56.6 billion
  • Cummins (CMI) — $24.3 billion
  • Thor Industries (THO) — $5.5 billion

ALSN’s rating

On December 13, 2016, Macquarie initiated the coverage of Allison Transmission Holdings with a “neutral” rating and also set the stock’s price target at $37.00 per share.

Allison Transmission’s performance in 3Q16

Allison Transmission (ALSN) reported 3Q16 net sales of $434.3 million, a fall of 11.9% compared to $493.0 million in 3Q15. The company’s gross profit margin fell 80 basis points, and its operating margin rose 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[1. earnings before interest, tax, depreciation, and amortization] of $150.5 million in 3Q16, a fall of 13.6% compared to 3Q15.

Allison Transmission’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 (ALSN) made the following projections for 2016:

  • net sales to fall 8.5%–9.5%
  • adjusted EBITDA margin of 34.0%–35.0%
  • adjusted free cash flow of $435.0 million–$455.0 million
  • capital expenditure of $70.0 million–$75.0 million
  • cash income tax of $10.0 million–$15.0 million

Next, we’ll look at Ball Corporation (BLL).