Allison Transmission (NYSE:ALSN) Posts Earnings Results, Beats Estimates By $0.58 EPS

Allison Transmission (NYSE:ALSN) posted its quarterly earnings data on Monday. The auto parts company reported $2.90 earnings per share for the quarter, topping analysts’ consensus estimates of $2.32 by $0.58, FiscalAI reports. Allison Transmission had a net margin of 12.02% and a return on equity of 38.18%. The firm had revenue of $1.53 billion during the quarter, compared to analysts’ expectations of $1.47 billion. During the same quarter last year, the company posted $1.63 EPS. The firm’s quarterly revenue was up 121.4% on a year-over-year basis.

Here are the key takeaways from Allison Transmission’s conference call:

• Third-quarter net sales rose 121% year over year to $1.534 billion, including $653 million from the Allison Off-Highway acquisition and a 27% increase in the legacy Allison Transmission business. Adjusted EBITDA increased 56% to $400 million, while adjusted free cash flow rose 51% to $278 million.
• Allison raised its full-year 2026 guidance for revenue, earnings, and cash flow for the second consecutive quarter, now expecting $5.975 billion-$6.075 billion of sales and $850 million-$900 million of adjusted free cash flow. Management expects the Off-Highway acquisition to be accretive to 2026 net income and EPS despite approximately $125 million of one-time pre-tax costs.
• Demand was particularly strong in North American on-highway markets, where quarterly sales reached a record $462 million, up 41% year over year. Management cited pent-up replacement demand in medium-duty trucks, robust Class 8 vocational demand, and a defense order book that is nearly full for 2027.
• The combined company is pursuing an integrated, energy-agnostic propulsion portfolio spanning conventional, hybrid, and electric products, with opportunities to capture more content per vehicle, cross-sell across customers, and generate at least $120 million in identified synergies. Management also sees additional margin opportunities from volume growth, cost reductions, and pricing.
• Raw-material inflation, particularly for steel and aluminum, remains a meaningful margin headwind, while geopolitical uncertainty continues to suppress industrial and agricultural demand in the Off-Highway business. Management also said high-voltage electrification adoption is not accelerating, with current demand concentrated in lower-voltage applications.

Allison Transmission Price Performance

ALSN opened at $112.56 on Tuesday. The company has a market capitalization of $9.30 billion, a P/E ratio of 12.66, a PEG ratio of 0.58 and a beta of 0.98. The company has a 50-day moving average of $117.37 and a 200-day moving average of $118.31. The company has a debt-to-equity ratio of 2.07, a quick ratio of 1.17 and a current ratio of 1.81. Allison Transmission has a 1-year low of $78.19 and a 1-year high of $137.62.

Allison Transmission Announces Dividend

The business also recently disclosed a quarterly dividend, which was paid on Monday, August 31st. Shareholders of record on Friday, August 21st were paid a dividend of $0.29 per share. This represents a $1.16 dividend on an annualized basis and a yield of 1.0%. The ex-dividend date was Friday, August 21st. Allison Transmission’s dividend payout ratio is 18.44%.

Allison Transmission News Roundup

Here are the key news stories impacting Allison Transmission this week:

• Positive Sentiment: Strong earnings and revenue beat: Allison reported adjusted diluted EPS of $2.90, well above analyst estimates ranging from $2.32 to $2.47 and up from $1.63 a year earlier. Net sales reached a record $1.534 billion, exceeding the roughly $1.47 billion consensus. Allison Transmission Surpasses Q3 Earnings and Revenue Estimates
• Positive Sentiment: Profitability improved sharply: Adjusted EBITDA rose 56% year over year to $400 million, representing a 26.1% margin. Operating cash flow was $343 million, supporting the company’s ability to fund capital returns and manage debt. Allison Announces Third Quarter 2026 Results
• Positive Sentiment: Core transmission business remained healthy: The Allison Transmission business unit generated record quarterly sales of $881 million, up 27% year over year, with management citing strength across most end markets and disciplined execution.
• Positive Sentiment: 2026 guidance raised: Management increased its full-year revenue, earnings and cash-flow expectations again, suggesting momentum is continuing beyond the quarterly beat. The year-over-year sales comparison includes the Allison Off-Highway business acquired on January 1, 2026, which makes the reported 121% revenue growth partly acquisition-driven. Allison Transmission Q3 2026 Earnings Call Transcript
• Neutral Sentiment: Investor focus: The earnings call is likely to center on the sustainability of commercial-vehicle demand, integration of the Off-Highway acquisition and Allison’s elevated debt burden. These factors could influence whether the strong results and higher outlook translate into further gains.

Wall Street Analysts Forecast Growth

A number of analysts have recently weighed in on the company. JPMorgan Chase & Co. cut their target price on Allison Transmission from $145.00 to $142.00 and set a “neutral” rating for the company in a research report on Thursday, October 8th. Citigroup raised Allison Transmission from a “neutral” rating to a “buy” rating and set a $135.00 price target for the company in a research note on Monday, October 12th. Wells Fargo & Company cut their price objective on shares of Allison Transmission from $137.00 to $120.00 and set an “equal weight” rating for the company in a research report on Thursday, October 8th. Morgan Stanley increased their price objective on shares of Allison Transmission from $126.00 to $130.00 and gave the stock an “equal weight” rating in a research note on Friday, July 17th. Finally, Weiss Ratings raised shares of Allison Transmission from a “hold (c+)” rating to a “buy (b-)” rating in a report on Tuesday, August 11th. Two equities research analysts have rated the stock with a Strong Buy rating, four have given a Buy rating and three have given a Hold rating to the company’s stock. Based on data from MarketBeat.com, the company has an average rating of “Moderate Buy” and an average price target of $131.57.

Insider Activity

In related news, CEO David S. Graziosi sold 26,708 shares of the business’s stock in a transaction dated Friday, August 21st. The stock was sold at an average price of $132.97, for a total value of $3,551,362.76. Following the completion of the sale, the chief executive officer directly owned 304,843 shares of the company’s stock, valued at $40,534,973.71. The trade was a 8.06% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. Also, insider Eric C. Scroggins sold 1,050 shares of the company’s stock in a transaction that occurred on Tuesday, August 11th. The shares were sold at an average price of $125.00, for a total value of $131,250.00. Following the sale, the insider owned 16,604 shares in the company, valued at $2,075,500. The trade was a 5.95% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Company insiders own 1.10% of the company’s stock.

About Allison Transmission

Allison Transmission, Inc designs and manufactures propulsion solutions for commercial, defense and off-highway vehicles. The company is best known for its fully automatic transmissions, which are used in applications including refuse collection, construction, distribution, emergency services, public transportation and mining.

Its product portfolio also includes electric and hybrid-electric propulsion systems, including the eGen Power electric axle and other electrification technologies.