Allison Transmission (NYSE:ALSN) Posts Quarterly Earnings Results, Beats Estimates By $0.58 EPS

Key Points

• Allison Transmission beat quarterly estimates: The company reported $2.90 in EPS versus the $2.32 consensus and revenue of $1.53 billion, ahead of the $1.47 billion estimate. Net sales rose 121% year over year, supported by the Allison Off-Highway acquisition and growth in its legacy business.
• Management raised full-year 2026 guidance for the second consecutive quarter, forecasting revenue of $5.975 billion to $6.075 billion and adjusted free cash flow of $850 million to $900 million. The acquisition is expected to be accretive to 2026 earnings despite roughly $125 million in one-time costs.
• Growth remains strongest in North American on-highway markets, but steel and aluminum inflation and weak industrial and agricultural demand in Off-Highway operations remain headwinds. Shares rose 4.2% after the results, while analysts maintained an overall “Moderate Buy” rating.

Allison Transmission (NYSE:ALSN - Get Free Report) released its earnings results on Monday. The auto parts company reported $2.90 earnings per share for the quarter, beating the consensus estimate of $2.32 by $0.58, FiscalAI reports. The company had revenue of $1.53 billion for the quarter, compared to the consensus estimate of $1.47 billion. Allison Transmission had a return on equity of 38.18% and a net margin of 12.02%.

Here are the key takeaways from Allison Transmission's conference call:

• Third-quarter net sales rose 121% year over year to $1.534 billion, including $653 million from the Allison Off-Highway acquisition and a 27% increase in the legacy Allison Transmission business. Adjusted EBITDA increased 56% to $400 million, while adjusted free cash flow rose 51% to $278 million.
• Allison raised its full-year 2026 guidance for revenue, earnings, and cash flow for the second consecutive quarter, now expecting $5.975 billion-$6.075 billion of sales and $850 million-$900 million of adjusted free cash flow. Management expects the Off-Highway acquisition to be accretive to 2026 net income and EPS despite approximately $125 million of one-time pre-tax costs.
• Demand was particularly strong in North American on-highway markets, where quarterly sales reached a record $462 million, up 41% year over year. Management cited pent-up replacement demand in medium-duty trucks, robust Class 8 vocational demand, and a defense order book that is nearly full for 2027.
• The combined company is pursuing an integrated, energy-agnostic propulsion portfolio spanning conventional, hybrid, and electric products, with opportunities to capture more content per vehicle, cross-sell across customers, and generate at least $120 million in identified synergies. Management also sees additional margin opportunities from volume growth, cost reductions, and pricing.
• Raw-material inflation, particularly for steel and aluminum, remains a meaningful margin headwind, while geopolitical uncertainty continues to suppress industrial and agricultural demand in the Off-Highway business. Management also said high-voltage electrification adoption is not accelerating, with current demand concentrated in lower-voltage applications.

Allison Transmission Trading Up 4.2%

NYSE ALSN traded up $4.51 during mid-day trading on Monday, hitting $112.56. The company's stock had a trading volume of 1,305,638 shares, compared to its average volume of 915,693. The stock's fifty day simple moving average is $117.78 and its two-hundred day simple moving average is $118.28. The firm has a market capitalization of $9.29 billion, a P/E ratio of 17.89, a price-to-earnings-growth ratio of 0.57 and a beta of 0.98. The company has a debt-to-equity ratio of 2.07, a current ratio of 1.81 and a quick ratio of 1.17. Allison Transmission has a 52-week low of $78.19 and a 52-week high of $137.62.

Allison Transmission Dividend Announcement

The business also recently disclosed a quarterly dividend, which was paid on Monday, August 31st. Stockholders of record on Friday, August 21st were paid a dividend of $0.29 per share. The ex-dividend date of this dividend was Friday, August 21st. This represents a $1.16 annualized dividend and a dividend yield of 1.0%. Allison Transmission's payout ratio is currently 18.44%.

Insider Buying and Selling

In other Allison Transmission news, CEO David Graziosi sold 26,708 shares of the company's stock in a transaction that occurred on Friday, August 21st. The stock was sold at an average price of $132.97, for a total transaction of $3,551,362.76. Following the sale, the chief executive officer owned 304,843 shares in the company, valued at $40,534,973.71. This represents a 8.06% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through this link. Also, insider Eric Scroggins sold 1,050 shares of the company's stock in a transaction on Tuesday, August 11th. The stock was sold at an average price of $125.00, for a total value of $131,250.00. Following the transaction, the insider owned 16,604 shares of the company's stock, valued at approximately $2,075,500. The trade was a 5.95% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. 1.10% of the stock is currently owned by company insiders.

Wall Street Analyst Weigh In

ALSN has been the topic of several recent research reports. Morgan Stanley increased their target price on Allison Transmission from $126.00 to $130.00 and gave the company an "equal weight" rating in a research report on Friday, July 17th. JPMorgan Chase & Co. reduced their target price on Allison Transmission from $145.00 to $142.00 and set a "neutral" rating for the company in a report on Thursday, October 8th. Citigroup upgraded shares of Allison Transmission from a "neutral" rating to a "buy" rating and set a $135.00 price target for the company in a report on Monday, October 12th. Weiss Ratings upgraded Allison Transmission from a "hold (c+)" rating to a "buy (b-)" rating in a report on Tuesday, August 11th. Finally, Freedom Broker assumed coverage on shares of Allison Transmission in a research note on Friday, October 2nd. They set a "buy" rating and a $144.00 target price on the stock. Two analysts have rated the stock with a Strong Buy rating, four have assigned a Buy rating and three have issued a Hold rating to the stock. According to MarketBeat.com, the stock presently has an average rating of "Moderate Buy" and a consensus price target of $131.57.

About Allison Transmission

Allison Transmission, Inc designs and manufactures propulsion solutions for commercial, defense and off-highway vehicles. The company is best known for its fully automatic transmissions, which are used in applications including refuse collection, construction, distribution, emergency services, public transportation and mining.

Its product portfolio also includes electric and hybrid-electric propulsion systems, including the eGen Power electric axle and other electrification technologies.

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