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Are Investors Undervaluing Allison Transmission (ALSN) Right Now?

Zacks Equity Research
3M (MMM) closed the most recent trading day at $172.84, moving -0.29% from the previous trading session.

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice 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 9.27, while its industry has an average P/E of 10.14. 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 10.18.

Investors should also note that ALSN holds a PEG ratio of 0.93. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ALSN's PEG compares to its industry's average PEG of 1.14. Within the past year, ALSN's PEG has been as high as 1.18 and as low as 0.83, with a median of 1.02.

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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