ALLISON TRANSMISSION HOLDING (NYSE:ALSN) appears to be flying under the radar despite its strong fundamentals.

Our stock screening tool has pinpointed ALLISON TRANSMISSION HOLDING (NYSE:ALSN) as an undervalued stock. ALSN maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Valuation Assessment of ALSN

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. ALSN boasts a 8 out of 10:

• ALSN is valuated reasonably with a Price/Earnings ratio of 11.57.
• ALSN's Price/Earnings ratio is rather cheap when compared to the industry. ALSN is cheaper than 88.89% of the companies in the same industry.
• ALSN's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.90.
• A Price/Forward Earnings ratio of 10.54 indicates a reasonable valuation of ALSN.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of ALSN indicates a rather cheap valuation: ALSN is cheaper than 90.48% of the companies listed in the same industry.
• Compared to an average S&P500 Price/Forward Earnings ratio of 21.58, ALSN is valued rather cheaply.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ALSN indicates a somewhat cheap valuation: ALSN is cheaper than 78.57% of the companies listed in the same industry.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of ALSN indicates a rather cheap valuation: ALSN is cheaper than 88.89% of the companies listed in the same industry.
• The excellent profitability rating of ALSN may justify a higher PE ratio.
• ALSN's earnings are expected to grow with 16.55% in the coming years. This may justify a more expensive valuation.

Analyzing Profitability Metrics

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. ALSN has earned a 9 out of 10:

• The Return On Assets of ALSN (13.70%) is better than 91.27% of its industry peers.
• With an excellent Return On Equity value of 44.28%, ALSN belongs to the best of the industry, outperforming 96.03% of the companies in the same industry.
• Looking at the Return On Invested Capital, with a value of 16.73%, ALSN belongs to the top of the industry, outperforming 89.68% of the companies in the same industry.
• Measured over the past 3 years, the Average Return On Invested Capital for ALSN is significantly above the industry average of 10.90%.
• The last Return On Invested Capital (16.73%) for ALSN is above the 3 year average (16.17%), which is a sign of increasing profitability.
• ALSN has a Profit Margin of 22.67%. This is amongst the best in the industry. ALSN outperforms 97.62% of its industry peers.
• With an excellent Operating Margin value of 30.76%, ALSN belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
• With an excellent Gross Margin value of 47.41%, ALSN belongs to the best of the industry, outperforming 88.89% of the companies in the same industry.

Unpacking ALSN's Health Rating

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. ALSN has earned a 7 out of 10:

• ALSN has a debt to FCF ratio of 3.65. This is a good value and a sign of high solvency as ALSN would need 3.65 years to pay back of all of its debts.
• The Debt to FCF ratio of ALSN (3.65) is better than 60.32% of its industry peers.
• A Current Ratio of 3.04 indicates that ALSN has no problem at all paying its short term obligations.
• The Current ratio of ALSN (3.04) is better than 74.60% of its industry peers.
• ALSN has a Quick Ratio of 2.42. This indicates that ALSN is financially healthy and has no problem in meeting its short term obligations.
• ALSN's Quick ratio of 2.42 is amongst the best of the industry. ALSN outperforms 81.75% of its industry peers.

A Closer Look at Growth for ALSN

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. ALSN has achieved a 4 out of 10:

• The Earnings Per Share has grown by an nice 11.69% over the past year.
• Measured over the past years, ALSN shows a quite strong growth in Earnings Per Share. The EPS has been growing by 11.10% on average per year.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of ALSN for a complete fundamental analysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.