Heavy Early Morning Activity On 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 $21.2 million.
  • ALSN traded 127,557 shares today in the pre-market hours as of 8:40 AM, representing 17.6% of its average daily volume.

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More details on ALSN:

Allison Transmission Holdings, Inc. designs and manufactures automatic transmissions for medium- and heavy-duty commercial vehicles, and medium- and heavy-tactical U.S. military vehicles. The stock currently has a dividend yield of 1.6%. ALSN has a PE ratio of 34.8. Currently there are 6 analysts that rate Allison Transmission Holdings a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Allison Transmission Holdings has been 771,300 shares per day over the past 30 days. Allison Transmission has a market cap of $5.6 billion and is part of the consumer goods sector and automotive industry. Shares are up 10.4% 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, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Auto Components industry. The net income increased by 283.0% when compared to the same quarter one year prior, rising from $11.20 million to $42.90 million.
  • ALSN's revenue growth trails the industry average of 13.5%. Since the same quarter one year prior, revenues slightly increased by 0.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 ($1.14 versus $0.88).
  • Currently the debt-to-equity ratio of 1.86 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 0.93, 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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