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Is Allison Transmission (ALSN) Stock Undervalued Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Allison Transmission (ALSN). ALSN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.93 right now. For comparison, its industry sports an average P/E of 11.12. Over the past year, ALSN's Forward P/E has been as high as 11.84 and as low as 8.35, with a median of 10.08.

ALSN is also sporting a PEG ratio of 0.99. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ALSN's PEG compares to its industry's average PEG of 1.19. ALSN's PEG has been as high as 1.18 and as low as 0.83, with a median of 1.01, all within the past year.

These are only a few of the key metrics included in Allison Transmission's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ALSN looks like an impressive value stock at the moment.


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