Allison Transmission (ALSN) Tops Q4 Sales Estimates but Disappoints with Guidance

Revenue and Earnings Beat

Allison Transmission (NYSE: ALSN) reported stronger-than-expected revenue in Q4 CY2024. Sales rose 2.7% year-on-year to $796 million, beating analyst estimates by 1.4%. Earnings per share (EPS) came in at $2.01, exceeding analyst consensus by 5.4%.

Guidance Below Expectations

However, the company's full-year revenue guidance of $3.25 billion at the midpoint fell 3.7% below analyst estimates, indicating a modest 0.8% growth compared to 6.3% in FY2024. EBITDA guidance for the upcoming financial year was also revised down to $1.2 billion, below analyst expectations of $1.24 billion.

Segment Performance

All three of Allison Transmission's key segments saw revenue growth over the past two years. North America On-Highway led the way with an average annualized growth rate of 13.6%, while International On-Highway and Service and Support averaged 3.5% and 7.3%, respectively.

Profitability

Allison Transmission has consistently maintained high profitability, with an average operating margin of 28.8% over the last five years. The company's operating margin remained stable at 29.5% in Q4, indicating a steady cost structure.

Earnings Growth

EPS has grown at a solid 11.1% compounded annual growth rate over the past five years. In Q4, EPS surpassed estimates by 5.4%, with the company reporting earnings of $2.01 per share. Over the next 12 months, analysts forecast EPS growth of 13.1%.

Key Takeaways

While Allison Transmission exceeded revenue expectations in Q4, its guidance came in below estimates. The stock's post-earnings decline highlights the market's disappointment. Investors should carefully consider the company's long-term fundamentals and valuation before making any investment decisions.