Allison(US:ALSN) ZACKS·2025-02-14 18:11Core Viewpoint - Allison Transmission Holdings (ALSN) has shown strong performance with a 32.1% increase in share price over the past six months, significantly outperforming its sector and the S&P 500 index, indicating strong fundamentals and growth prospects that make it a compelling buy [1][2]. Financial Performance - Allison achieved record net sales of $3.2 billion in 2024, with a 15% year-over-year revenue increase in its North America on-highway market, driven by demand for Class 8 vocational vehicles [5]. - The defense segment experienced a 28% year-over-year sales increase to $212 million, attributed to rising global defense spending due to geopolitical uncertainties [6]. - For 2025, net sales are expected to range from $3.2 billion to $3.3 billion, with net income anticipated between $735 million and $785 million, reflecting growth from the previous year [10][11]. Growth Initiatives - The company is expanding its product portfolio, including a $100 million annual revenue opportunity from its wide-mining dump truck initiative and the launch of its 6,000 series transmission for heavy-duty vehicles [7]. - The e-Gen Power portfolio is adapting to industry changes, with specific focus on the eGen Flex and eGen Force portfolios enhancing Allison's market prospects [8]. Shareholder Returns - Allison generated $658 million in adjusted free cash flow in 2024, allowing for over $100 million in debt reduction and more than $250 million in share repurchases, alongside a 67% increase in quarterly dividends over the past five years [9]. Earnings Estimates - The Zacks Consensus Estimate for ALSN's first-quarter 2025 EPS is $2.17, indicating a year-over-year growth of 14.21%, with the 2025 EPS estimate at $9.22, reflecting a 10.95% growth [12]. Conclusion - With robust financial performance, strategic growth initiatives, and positive earnings projections for 2025, Allison presents an attractive investment opportunity, currently holding a Zacks Rank 2 (Buy) [13].