Core Viewpoint - Wealth Oklahoma has initiated a new position in Allison Transmission Holdings by acquiring 75,606 shares valued at approximately $6.4 million, representing 1.9% of its reportable U.S. equity assets as of Q3 2025 [1][2][3]. Company Overview - Allison Transmission designs and manufactures fully automatic transmissions and related parts for commercial, defense, and specialty vehicles, generating revenue primarily through product sales to original equipment manufacturers (OEMs) and aftermarket services [5][8]. - The company reported trailing twelve-month (TTM) revenue of $3.2 billion and net income of $762 million for the period ended June 30, 2025 [3][4]. Financial Performance - As of October 10, 2025, Allison Transmission's dividend yield was 1.3%, and shares were priced at $81.02, which is 35% below their 52-week high as of October 9, 2025 [3][4]. - The company's revenue for the first half of 2025 was $1.58 billion, a slight decrease from $1.61 billion in 2024 [9]. - Allison Transmission has revised its 2025 revenue expectations to between $3.1 billion and $3.2 billion, down from a previous estimate of $3.2 billion to $3.3 billion due to softness in demand in certain end markets [10]. Market Position - Allison Transmission is the world's largest manufacturer of medium and heavy-duty fully automatic transmissions, leveraging a broad distribution network and long-standing OEM relationships [9][11]. - The company serves a global customer base, focusing on commercial vehicle and defense markets [6][8]. Investment Rationale - Wealth Oklahoma's acquisition of Allison Transmission shares is seen as a strategic move, reflecting confidence in the company's potential recovery, especially following its recent acquisition of Dana Incorporated, which enhances its drivetrain and propulsion systems capabilities [11]. - With a price-to-earnings ratio of 9, Allison Transmission's valuation appears attractive, indicating a potential buying opportunity [12].

Core Thesis - Allison Transmission Holdings, Inc. is viewed as a compelling value opportunity, trading below intrinsic value with a P/E ratio of 9x, EBITDA of 8.0x, and revenue multiple of 2.7x [2] Financial Performance - The company's core on-highway segment revenue declined from $456 million in Q2 2024 to $417 million in Q2 2025, while defense-related revenues grew by 47% [3] - Earnings improved due to modest reductions in cost of goods sold (COGS), selling, general and administrative (SG&A) expenses, and research and development (R&D) expenses [3] Debt and Financial Flexibility - Allison carries significant leverage, with approximately 60% of enterprise value in debt, but most of this debt is long-dated with below-market interest rates, providing financial flexibility in a high-interest-rate environment [3] Strategic Acquisition - The company plans to acquire Dana Incorporated by Q4 2025, using a combination of cash and debt to expand its international footprint and enhance product offerings [4] - The acquisition is expected to generate synergies that will bolster cash flows over the medium term, despite potential near-term headwinds from integration costs and higher interest expenses [4] Competitive Advantages - Allison's durable competitive advantages include proprietary transmission technologies, strong brand equity, long-standing OEM integration, and a global aftermarket network, which create high switching costs and recurring revenue streams [5] - Multi-year defense contracts further enhance regulatory and contractual moats, limiting competition and providing a defensible market position [5] Valuation Potential - A simple discounted cash flow (DCF) analysis indicates an equity value of approximately $12.8 billion, suggesting a potential upside of roughly 75% [4]