Today's Pre-Market Mover With Heavy Volume: Allison Transmission Holdings (ALSN)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Allison Transmission Holdings ( ALSN) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Allison Transmission Holdings as such a stock due to the following factors:

  • ALSN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.9 million.
  • ALSN traded 104,686 shares today in the pre-market hours as of 8:55 AM, representing 15.8% of its average daily volume.

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More details on ALSN:

Allison Transmission Holdings, Inc., together with its subsidiaries, engages in the design and manufacture of commercial and military fully-automatic transmissions and hybrid-propulsion systems for transit buses. The stock currently has a dividend yield of 2%. ALSN has a PE ratio of 33.8. Currently there are 3 analysts that rate Allison Transmission Holdings a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Allison Transmission Holdings has been 389,000 shares per day over the past 30 days. Allison Transmission has a market cap of $4.4 billion and is part of the consumer goods sector and automotive industry. Shares are up 17.4% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Allison Transmission Holdings as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Auto Components industry average. The net income increased by 38.2% when compared to the same quarter one year prior, rising from $32.20 million to $44.50 million.
  • The gross profit margin for ALLISON TRANSMISSION HLDGS is rather high; currently it is at 54.81%. Regardless of ALSN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALSN's net profit margin of 9.54% compares favorably to the industry average.
  • ALLISON TRANSMISSION HLDGS has improved earnings per share by 41.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ALLISON TRANSMISSION HLDGS increased its bottom line by earning $2.75 versus $0.56 in the prior year. For the next year, the market is expecting a contraction of 68.0% in earnings ($0.88 versus $2.75).
  • Currently the debt-to-equity ratio of 2.00 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, ALSN maintains a poor quick ratio of 0.88, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Auto Components industry and the overall market, ALLISON TRANSMISSION HLDGS's return on equity is below that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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