Critical Contrast: Horizon Global (HZN) versus Allison Transmission (ALSN)

Allison Transmission (NYSE:ALSN) and Horizon Global (NYSE:HZN) are both auto/tires/trucks companies, but which is the better business? We will compare the two companies based on the strength of their profitability, risk, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Dividends

Allison Transmission pays an annual dividend of $0.60 per share and has a dividend yield of 1.3%. Horizon Global does not pay a dividend. Allison Transmission pays out 12.6% of its earnings in the form of a dividend.

Institutional & Insider Ownership

53.4% of Horizon Global shares are owned by institutional investors. 9.0% of Allison Transmission shares are owned by insiders. Comparatively, 1.9% of Horizon Global shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Allison Transmission and Horizon Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allison Transmission 23.55% 96.42% 15.08%
Horizon Global -24.00% -731.99% -6.04%

Valuation and Earnings

This table compares Allison Transmission and Horizon Global’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Allison Transmission $2.71 billion 2.14 $639.00 million $4.78 9.69
Horizon Global $849.95 million 0.08 -$203.96 million ($1.38) -1.87

Allison Transmission has higher revenue and earnings than Horizon Global. Horizon Global is trading at a lower price-to-earnings ratio than Allison Transmission, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Allison Transmission and Horizon Global, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allison Transmission 2 4 3 0 2.11
Horizon Global 1 1 1 0 2.00

Allison Transmission currently has a consensus price target of $47.88, indicating a potential upside of 3.38%. Horizon Global has a consensus price target of $7.00, indicating a potential upside of 171.32%. Given Horizon Global’s higher probable upside, analysts plainly believe Horizon Global is more favorable than Allison Transmission.

Risk & Volatility

Allison Transmission has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, Horizon Global has a beta of 1.94, suggesting that its share price is 94% more volatile than the S&P 500.

Summary

Allison Transmission beats Horizon Global on 12 of the 16 factors compared between the two stocks.

Allison Transmission Company Profile

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells commercial and defense fully-automatic transmissions for medium- and heavy-duty commercial vehicles, and medium- and heavy-tactical U.S. defense vehicles worldwide. It offers 12 transmission product lines for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school, transit, and hybrid-transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. The company markets its transmissions under Allison Transmission brand name; and remanufactured transmissions under ReTran brand name. It also sells branded replacement parts, support equipment, and other products necessary to service the installed base of vehicles utilizing its transmissions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. As of February 28, 2019, the company served customers through an independent network of approximately 1,400 independent distributor and dealer locations. The company was formerly known as Clutch Holdings, Inc. Allison Transmission Holdings, Inc. was founded in 1915 and is headquartered in Indianapolis, Indiana.

Horizon Global Company Profile

Horizon Global Corporation designs, manufactures, and distributes a range of towing, trailering, cargo management, and other related accessory products to the automotive aftermarket, retail, and original equipment channels worldwide. It operates through three segments: Horizon Americas, Horizon Asia-Pacific, and Horizon Europe-Africa. The company provides towing products, such as hitches, fifth wheels, gooseneck hitches, weight distribution systems, wiring harnesses, draw bars, ball mounts, crossbars, towbars, security, and other towing accessories for attaching a trailer, camper, etc. It also offers trailering products, including brake controls, jacks, winches, couplers, interior and exterior vehicle lighting, and brake replacement parts. In addition, the company provides cargo management products, such as bike racks, roof cross bar systems, cargo carriers, luggage boxes, car interior protective products, ropes, tie-downs, tarps, bungee cords, loading ramps, and interior travel organizers. Further, it offers other products comprising tubular push and sports bars, side steps, skid plates, and oil pans. Horizon Global Corporation provides its products under the Reese, Hayman-Reese, Draw-Tite, and Westfalia, as well as Aqua Clear, Bulldog, BTM, DHF, Engetran, Fulton, Kovil, Parkside, Reese Secure, Reese Explorer, Reese Power Sports, Reese Towpower, ROLA, Tekonsha, Trojan, WesBarg, and Witter Towbar Systems brands. The company offers its products through original equipment manufacturers and suppliers, as well as aftermarket and retail customers in the agricultural, automotive, construction, fleet, horse/livestock, industrial, marine, military, recreational, trailer, and utility markets, and mining and municipalities; and serves end consumers through independent installers, warehouse distributors, dealers, original equipment, retail stores, and online retailers. Horizon Global Corporation was incorporated in 2015 is headquartered in Troy, Michigan.

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