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Is Allison Transmission (ALSN) a Great Value Stock Right Now?

Zacks Equity Research
First Financial (FFIN) delivered earnings and revenue surprises of 3.33% and 1.36%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Allison Transmission (ALSN). ALSN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 9.97, while its industry has an average P/E of 10.39. ALSN's Forward P/E has been as high as 11.84 and as low as 8.35, with a median of 10.23, all within the past year.

We also note that ALSN holds a PEG ratio of 1. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALSN's industry has an average PEG of 1.13 right now. ALSN's PEG has been as high as 1.18 and as low as 0.83, with a median of 1.02, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Allison Transmission is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ALSN feels like a great value stock at the moment.


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