Start here if you're new
what it is
Allison makes heavy-duty automatic transmissions and drivetrain systems for trucks, buses, military vehicles, and off-highway equipment.
how it gets paid
Last year Allison Trans made $3.0B in revenue.
why growth slowed
Revenue fell 6.7% last year. Fourth-quarter sales declined more than 7% vs. prior year.
what just happened
Allison's last quarter came in at $1.62 EPS, below the $1.85 analysts expected.
At a glance
B+ balance sheet — decent shape, but not bulletproof
65/100 earnings predictability — reasonably predictable
15.9x trailing p/e — the market's not buying it — or you found a deal
1.2% dividend yield — cash in your pocket every quarter
14.5% return on capital — nothing to write home about
xvary composite: 73/100 — average
What they do
Allison makes heavy-duty automatic transmissions and drivetrain systems for trucks, buses, military vehicles, and off-highway equipment.
Allison products are specified by more than 250 vehicle manufacturers, according to company product material and web references. That matters because once your truck platform is built around a transmission family, switching is expensive and slow. You can see the payoff in a 48.8% gross margin and a 35.0% operating margin.
How they make money
$3.0B
annual revenue · revenue declined -6.7% last year
total revenue
$3.0B
6.7%
The products that matter
fully automatic commercial vehicle systems
Allison Transmission
$3.0B revenue · 14.1% net margin
it's the legacy business that generated $3.0B last year and still kept 14.1% of revenue as profit despite a 6.7% sales decline. that's the cash engine.
profit engine
off-highway drive and motion systems
Allison Off-Highway Drive & Motion Systems
25 countries · $120M run-rate target
acquired on jan 2, 2026, this business broadens Allison into europe and india and is tied to roughly $120M in expected annual run-rate benefits over the next several years. that's the integration bet.
deal thesis
defense and international end markets
Defense + Outside North America On-Highway
+7% defense · +6% international
not every end market is rolling over. defense grew 7% and outside north america on-highway grew 6% in the latest quarter, which helps offset the 25% off-highway drop and 14% north america on-highway decline.
offsets
Key numbers
$10.00
fy2027 eps est
$7B
fy2029 rev est
15.9x
trailing p/e
1.2%
dividend yield
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 75 / 100
- long-term debt $2.9B (23% of capital)
- net profit margin 15.3% — keeps 15 cents of every dollar in revenue
- return on equity 22% — $0.22 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in ALSN 3 years ago → it's now worth $25,590.
The index would have given you $13,880.
source: institutional data · total return
What just happened
missed estimates
Allison's last quarter came in at $1.62 EPS, below the $1.85 analysts expected.
Results heading into the Dana deal were softer than expected. Fourth-quarter sales declined more than 7% vs. prior year to $737 million, even as companywide gross margin stayed high at 48.8%.
$737M
revenue
$1.62
eps
48.8%
gross margin
the number that mattered
The 12.4% EPS miss mattered most because this stock trades on steady execution, and the quarterly EPS line fell from $2.29 in Q2 2025 to $1.18 in Q4 2025.
-
allison transmission holdings completed its previously announced acquisition of dana’s off-highway drive & motion systems business on january 2, 2026.the addition nearly doubles allison’s sales base and broadens its presence across 25 countries, particularly in europe and india. management expects the combined entity to generate approximately $120 million in annual run-rate over the next several years, driven by operational, procurement, and engineering efficiencies.
-
following the transaction, the company adopted a new reporting structure consisting of two segments: allison transmission and allison off-highway drive & motion systems.
-
results heading into the deal were softer than expected.
-
fourth-quarter sales declined more than 7% vs. prior year, to $737 million.
-
a 25% drop in the global off-highway market, a 14% decline in north america on-highway, and a 5% decrease in service parts, support equipment & other, more than offset gains of 6% in outside north america on-highway and 7% in defense.
source: company earnings report, 2026
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What could go wrong
the #1 risk is integrating Dana's off-highway drive & motion systems while the legacy business is already slowing.
med
integration misses the script
Allison closed the Dana deal on jan 2, 2026 and now has to stitch together operations across 25 countries while asking investors to underwrite a much larger business.
If the company fails to move toward the roughly $6B combined revenue target or the $120M run-rate benefit plan, the deal stops looking accretive and starts looking expensive.
med
off-highway weakness lasts longer
Global off-highway demand fell 25% in the latest quarter. That is not background noise when you just bought a business tied more closely to that market.
A weak cycle would pressure the very segment meant to diversify Allison, and it would make the post-deal growth story harder to prove.
med
north america on-highway stays soft
North America on-highway revenue declined 14% in the latest quarter. That's still core demand for the legacy Allison business.
If that market does not stabilize, the company will be trying to use acquisition benefits to outrun weakness in its original cash engine.
Between a 25% off-highway drop, a 14% north america on-highway decline, and $2.9B of long-term debt, your downside case is not one bad quarter — it's a longer proof-of-execution period.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
first full post-deal quarter
watch the first clean quarter after the acquisition for segment detail, margin shape, and whether management still sounds confident about the roughly $6B revenue setup.
metric
$120M run-rate benefits
management promised roughly $120M over the next several years. if the timeline slips early, the market will notice.
trend
off-highway demand
a 25% drop is the number to beat. you want to see that market stop getting worse before calling the deal well timed.
risk
legacy business erosion
north america on-highway fell 14% and quarterly revenue dropped to $693M. if the old business keeps weakening, the acquisition has to work even harder.
Analyst rankings
short-term outlook
top 5%
momentum score 1 is the best bucket. in human-speak, analysts think the stock still has unusually strong near-term performance potential.
risk profile
average
stability score 3 means typical stock risk. you are not buying a utility, but you are not buying chaos either.
chart momentum
average
technical score 3 says the chart is fine, not screaming. price action is waiting for proof from the business.
earnings predictability
65 / 100
the numbers are reasonably predictable, though this ranking matters less during a large acquisition reset.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 175 buyers vs. 201 sellers in 4q2025. total institutional holdings: 85.2M shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$93
$185
$117
current price
$139
target midpoint · +19% from current · 3-5yr high: $170 (+45% · 11% ann'l return)
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