The upcoming report from Allison Transmission (ALSN) is expected to reveal quarterly earnings of $1.56 per share, indicating a decline of 22.4% compared to the year-ago period. Analysts forecast revenues of $722.46 million, representing a decline of 9.2% year over year.The consensus EPS estimate for the quarter has been revised 29.4% higher over the last 30 days to the current level. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe ...

Core Viewpoint - Investors are evaluating Allison Transmission (ALSN) and Modine (MOD) for potential undervalued stock opportunities in the Automotive - Original Equipment sector [1] Valuation Metrics - ALSN has a forward P/E ratio of 12.03, while MOD has a significantly higher forward P/E of 45.63 [5] - ALSN's PEG ratio is 1.21, indicating a more favorable valuation compared to MOD's PEG ratio of 1.34 [5] - ALSN's P/B ratio stands at 5.26, compared to MOD's P/B ratio of 10.24, suggesting ALSN is more undervalued relative to its book value [6] Earnings Outlook - Both ALSN and MOD have a Zacks Rank of 1 (Strong Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3] - Despite both companies having solid earnings prospects, ALSN is identified as the superior value option based on valuation metrics [7] Value Grades - ALSN holds a Value grade of A, while MOD has a Value grade of D, highlighting ALSN's stronger position in terms of value [6]

Industry Overview - The Zacks Automotive - Original Equipment Industry includes companies that design, engineer, and manufacture components and systems for vehicle manufacturers, focusing on powertrain, driveline, safety, and structural technologies for electric, hybrid, and internal combustion vehicles [3] - The industry serves global automotive manufacturers, with demand closely tied to vehicle production volumes and model mix [3] Current Challenges - Vehicle demand is expected to cool in 2026 due to high interest rates, elevated car prices, and tighter household budgets, leading to affordability issues [1][4] - U.S. vehicle sales are projected to decline to about 15.8 million units in 2026, reflecting a 2.4% year-over-year decrease [4] - The average new car transaction price is near $50,000, with financing costs consuming a larger share of household income, limiting buyer activity [4] Technological Trends - The industry is undergoing a transformation towards electric, hybrid, and software-defined vehicles, requiring suppliers to deliver lightweight structures and advanced safety systems [5] - The push towards electrification and advanced driver assistance is altering the component mix and supplier positioning, favoring companies with strong engineering capabilities [5] Cost Management - Rising expenses related to R&D, skilled labor, and retooling manufacturing lines are increasing cost intensity for suppliers [6] - Operational efficiency, disciplined capital allocation, and supply chain optimization are critical for suppliers to manage costs effectively while supporting innovation [6] Tariff and Trade Impacts - The U.S. has imposed 25% tariffs on certain imported automobile parts, increasing cost volatility and encouraging regional localization among suppliers [7] - Suppliers with established regional manufacturing footprints are better positioned to navigate these shifts compared to smaller or more concentrated peers [7] Industry Performance - The Zacks Automotive - Original Equipment Industry ranks 148 out of over 240 Zacks industries, placing it in the bottom 39% and indicating mixed to dull near-term prospects [9][10] - The industry's earnings estimates have declined by 15.5% over the past year, reflecting a negative earnings outlook [10] Stock Performance - The industry has underperformed the S&P 500 and its sector over the past year, losing 3.5% compared to the sector's growth of 30% and the S&P 500's growth of 17% [12] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 16.14X, compared to the S&P 500's 17.2X and the sector's 28.74X [15] - Over the past five years, the industry has traded between 7.94X and 22.18X, with a median of 14.30X [16] Notable Companies - Modine Manufacturing is positioned to benefit from data center cooling, with a projected revenue growth of over 70% year-over-year for data center revenues [19][20] - Allison Transmission is well-positioned to benefit from rising global defense budgets, with a new contract for Poland's Infantry Fighting Vehicle program [24][26] - Westport Fuel Systems focuses on advanced alternative fuel systems, with a joint venture with Volvo enhancing its role in low- and net-zero carbon transportation [29][31]

Core Insights - Allison Transmission Holdings (ALSN) and Ford Motor (F) are highlighted as top auto stocks with strong buy ratings as they approach Q4 results [1][2] Group 1: Allison Transmission Holdings (ALSN) - Allison's core business, a key supplier of transmissions for commercial and defense vehicles, has been performing well, supported by strategic acquisitions that enhance investor confidence [3] - The recent acquisition of Dana Incorporated's Off-Highway Drive & Motion Systems business has created a global multi-billion-dollar revenue enterprise across 29 countries [3] - ALSN has experienced a remarkable increase of over 150% in stock price over the last three years, significantly outperforming broader indexes and the Zacks Auto, Tires and Trucks sectors, which rose by 49% [4] - Despite a projected 22% year-over-year decline in Q4 EPS to $1.56, the Most Accurate estimate suggests a potential earnings beat with a forecast of $1.68, indicating a 7.69% upside [6][9] - Annual sales and EPS are expected to rebound significantly in FY26, reaching new peaks of $5.67 billion and $9.68 per share, respectively [7] Group 2: Ford Motor (F) - Ford is positioned as an intriguing value stock, with expectations to surpass Q4 2025 EPS estimates of $0.17, as the Most Accurate estimate is at $0.19 [9][11] - Total vehicle sales for Ford increased by 6% in 2025 to 2.2 million, marking its best performance since 2019 [10] - To mitigate tariff impacts, Ford launched a "From America, For America" campaign, allowing public purchases at employee discount prices while cutting costs on future vehicle models [12] - Ford's stock has rebounded nearly 50% over the past year, trading around $13, and has shown positive gains of 7% over the last three years [12] - The stock trades at less than 10X forward earnings, with a promising rebound in FY26 EPS expected at $1.53, supporting a 4.35% annual dividend yield while maintaining a payout ratio under 50% [13][14]

Core Viewpoint - Allison Transmission Holdings Inc. will announce its fourth quarter and full year 2025 financial results on February 23, 2026, with a conference call scheduled for 5:00 p.m. EST [1] Company Overview - Allison Transmission is a global leader in high-performance mobility and work solutions, operating through two business units: Allison Transmission and Allison Off-Highway Drive & Motion Systems [3] - The company is headquartered in Indianapolis, Indiana, and has been a reliable partner in essential industries for over 110 years, serving more than 150 countries [3]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Allison Transmission, with a focus on how actual results compare to estimates, which could significantly influence stock price movements [1][2]. Earnings Expectations - Allison Transmission is expected to report quarterly earnings of $1.56 per share, reflecting a year-over-year decrease of 22.4% [3]. - Revenues are projected to be $722.46 million, down 9.2% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 26.78% higher in the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Allison Transmission is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +7.69% [12]. Earnings Surprise Prediction - A positive Earnings ESP reading suggests a likely earnings beat, especially when combined with a Zacks Rank of 1 [10]. - Allison Transmission currently holds a Zacks Rank of 1, indicating a strong likelihood of exceeding the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, Allison Transmission had an expected EPS of $1.95 but reported $1.63, resulting in a surprise of -16.41% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates three times [14]. Industry Comparison - Patrick Industries, another player in the automotive industry, is expected to report earnings of $0.74 per share, showing a year-over-year increase of 42.3% [18]. - Despite a positive Earnings ESP of +2.70%, Patrick Industries has a Zacks Rank of 4, making it challenging to predict an earnings beat [20].

Core Insights - The article emphasizes the importance of the Zacks Rank in identifying strong stocks through earnings estimates and revisions, while also acknowledging that investors have diverse strategies [1] - Value investing is highlighted as a popular method for identifying undervalued stocks that present profit opportunities [2] Company Analysis - Allison Transmission Holdings (ALSN) is currently under observation, holding a Zacks Rank of 1 (Strong Buy) and a Value grade of A [4] - ALSN's current P/E ratio is 10.31, significantly lower than the industry average of 17.85, indicating potential undervaluation [4] - The stock's Forward P/E has fluctuated between 9.25 and 13.43 over the past year, with a median of 11.03, suggesting a favorable valuation trend [4][5] - Given the strong earnings outlook and current valuation metrics, ALSN is positioned as a compelling value stock [5]

Core Insights - The article discusses a rotation thesis from Big Tech investments to cyclical value, energy, and high-quality stocks that focus on dividend income and growth [1]. Group 1: Investment Focus - The emphasis is on transitioning investment strategies towards sectors that offer dividend growth opportunities, particularly in cyclical and energy stocks [1][2]. - The analysis aims to provide actionable investment ideas that align with major economic developments in supply chains and commodities [2]. Group 2: Analyst Background - Leo Nelissen is identified as an analyst specializing in economic developments related to supply chains, infrastructure, and commodities, contributing to the iREIT®+HOYA Capital team [2].

Core Insights - Allison Transmission is significantly expanding its operations and investment in India, aligning with the "Make in India" initiative and industrial modernization efforts [1][3] Group 1: Expansion and Investment - The company announced a $100 million expansion of its Chennai plant in October 2024, with initial production expected to begin in Q1 2026 and ramping to full capacity in 2027 [2][7] - This expansion is part of Allison's strategy to meet increasing global demand and solidify its role in India's industrial growth [7] Group 2: Strategic Partnerships - Allison has signed a Memorandum of Understanding with Armoured Vehicles Nigam Limited to establish a Maintenance, Repair and Overhaul center in India, supporting national security and modernization initiatives [3] - The company is collaborating with Precision Gasification Services Pvt. Ltd. to deploy a new well killing solution featuring the Allison 4700 Oil Field Series transmission, contributing to the energy sector [5] Group 3: Industry Impact - In the mining sector, Allison's technology is enhancing infrastructure development and resource extraction efficiency, with Shar Projects Private Limited expanding its fleet with Allison-equipped dump trucks [4][5] - Allison's transmissions are being integrated into Daimler India Commercial Vehicles' medium-duty trucks, which are exported to support regional transport needs in South Africa [6]

Core Viewpoint - Allison Transmission's stock price increased by 3.3% following an upgrade to "strong buy" by Raymond James, with a price target of $110, primarily due to its acquisition of Dana Incorporated's off-highway business [1][3]. Group 1: Acquisition Details - Allison Transmission has entered into a definitive agreement to acquire Dana's Off-Highway business for $2.7 billion, which manufactures power trains for various sectors including construction and agriculture [4]. - The acquisition has received all necessary regulatory approvals, with a closing date set for later this month [4]. Group 2: Financial Implications - Post-acquisition, Allison is expected to have a more balanced revenue mix and an additional $2.5 billion in revenue compared to its current figures [5]. - Allison's market capitalization stands at $8 billion, with trailing earnings of just under $700 million, resulting in a valuation of 11 times earnings [6]. - Analysts predict that Allison may struggle to grow earnings by even 1% annually before considering the impact of the Dana acquisition [6]. Group 3: Debt Considerations - Allison currently has $1.5 billion in net debt, which is expected to increase to $4.2 billion due to the acquisition of Dana [7]. - This increase in debt could elevate Allison's enterprise value to approximately $12 billion, making it appear more expensive at a presumed enterprise value of 17 times earnings [7].