Are Investors Undervaluing Allison Transmission Holdings (ALSN) Right Now?
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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Allison Transmission Holdings (ALSN). ALSN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 10.05, which compares to its industry's average of 21.41. Over the last 12 months, ALSN's Forward P/E has been as high as 10.16 and as low as 6.99, with a median of 8.25.
Finally, investors will want to recognize that ALSN has a P/CF ratio of 8.40. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ALSN's P/CF compares to its industry's average P/CF of 32.54. Within the past 12 months, ALSN's P/CF has been as high as 8.40 and as low as 5.43, with a median of 6.55.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Allison Transmission Holdings 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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Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report
