ALLISON TRANSMISSION HOLDING (NYSE:ALSN) Presents a Compelling Value Investment Case

Investors looking for chances in undervalued companies often use screening methods that find stocks trading for less than their inherent value while keeping good fundamental traits. The "Decent Value" method aims at securities with strong valuation scores, typically above 7 out of 10, while making certain of sufficient results in profitability, financial condition, and growth measures. This system fits with value investing ideas by concentrating on companies that seem priced lower than their actual worth without giving up operational quality or financial soundness.

Allison Transmission Holdings (NYSE:ALSN) presents an interesting example in this investment structure. The Indianapolis-based producer of commercial and defense vehicle propulsion systems shows several traits important to fundamental investors looking for undervalued chances.

Valuation Metrics

The company's valuation profile is notably appealing, receiving an 8 out of 10 in ChartMill's evaluation. Important measures backing this assessment consist of:

• Price-to-Earnings ratio of 9.03, much lower than the S&P 500 average of 27.02
• Price-to-Forward-Earnings ratio of 7.87, considerably below the market average of 22.57
• Enterprise Value to EBITDA ratio placing the company as less expensive than 91.47% of industry peers
• Price-to-Free-Cash-Flow ratio situating the company more affordably than 93.02% of machinery sector competitors

These valuation numbers indicate market participants might be pricing Allison Transmission below its worth compared to both wider market indexes and its direct industry rivals, forming a possible opening for value-focused investors.

Financial Health Assessment

With a health rating of 7 out of 10, Allison Transmission shows good financial foundations. The company keeps solid liquidity measures that greatly beat industry norms:

• Current Ratio of 3.36, doing better than 82.95% of industry peers
• Quick Ratio of 2.64, exceeding 85.27% of machinery sector companies
• Debt-to-Free-Cash-Flow ratio of 3.67, showing acceptable debt levels compared to cash creation

While the company has a higher debt-to-equity ratio than many competitors, its good cash flow creation offers enough coverage for debt responsibilities, supporting overall financial steadiness.

Profitability Profile

Allison Transmission does very well in profitability with a rating of 9 out of 10, showing outstanding operational effectiveness:

• Return on Equity of 43.47%, higher than 96.90% of industry peers
• Return on Assets of 14.08%, better than 93.02% of competitors
• Operating Margin of 31.72%, placed with the top performers in the machinery sector
• Profit Margin of 23.81%, exceeding 99.22% of industry counterparts

These measures show the company's skill in effectively turning revenue into profits, a key factor for value investors who look for lasting business models with strong competitive advantages.

Growth Trajectory

The company's growth rating of 6 out of 10 shows consistent increase with gathering speed:

• Earnings Per Share growth of 14.29% over the past year
• Historical EPS growth averaging 11.10% each year
• Expected future EPS growth of 14.32% per year based on analyst forecasts
• Anticipated revenue growth speeding up to 14.78% each year

This growth picture, joined with the company's appealing valuation, forms what value investors often call a "GARP" chance—growth at a sensible price.

Investment Considerations

For value investors, Allison Transmission stands for the kind of chance that matches traditional value investing ideas. The company trades at reduced multiples while keeping better profitability measures and a sound financial state. The mix of good cash flow creation, steady share repurchases, and an increasing dividend (with 10.94% yearly growth over 10+ years) further improves its attraction for investors looking for both value and income features.

The fundamental analysis report for Allison Transmission offers more detailed views into these measures and their meanings for possible investors. Review the complete fundamental analysis to examine extra data points and comparative industry study.

Investors curious about finding similar chances can explore additional results from the Decent Value screen that identified Allison Transmission as a candidate deserving more examination.

Disclaimer: This analysis is based on fundamental data and screening methods for informational reasons only. It does not form investment advice, nor does it suggest any specific investment action. Investors should do their own research and talk with financial advisors before making investment choices.