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NEW YORK (TheStreet) -- Allison Transmission Holdings (ALSN) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLISON TRANSMISSION HLDGS (ALSN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and premium valuation."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ALSN's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $143.40 million or 10.56% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.46%.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, ALLISON TRANSMISSION HLDGS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The debt-to-equity ratio is very high at 2.06 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ALSN maintains a poor quick ratio of 0.94, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: ALSN Ratings Report
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