The company announced investment funds affiliated with The Carlyle Group and Onex Corporation will sell a total of 35 million shares of Allison Transmission in a secondary offering. The underwriter of the offering, Citigroup, will have the option to buy up to 5.25 million additional shares. Allison Transmission will not receive any proceeds from the offering.
After the offering, Allison will repurchase 5 million of the 35 million shares of common stock sold. The company's purchase price will be the same as the purchase price payable by the underwriter.
TheStreet Ratings team rates ALLISON TRANSMISSION HLDGS as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLISON TRANSMISSION HLDGS (ALSN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 7.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 89.5% when compared to the same quarter one year prior, rising from $27.50 million to $52.10 million.
- Net operating cash flow has significantly increased by 80.25% to $98.60 million when compared to the same quarter last year. In addition, ALLISON TRANSMISSION HLDGS has also vastly surpassed the industry average cash flow growth rate of -4.93%.
- Powered by its strong earnings growth of 86.66% and other important driving factors, this stock has surged by 28.24% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- ALLISON TRANSMISSION HLDGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALLISON TRANSMISSION HLDGS reported lower earnings of $0.88 versus $2.75 in the prior year. This year, the market expects an improvement in earnings ($1.17 versus $0.88).
- You can view the full analysis from the report here: ALSN Ratings Report