ALSN
Allison Transmission Holdings, Inc.
$115.06
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 38.6% below fair value
You pay
$115.06
Bear
$158.50
Fair
$187.32
Bull
$216.14
Bear
$158.50
+37.8%
$8.07 × 22x P/E
Fair
$187.32
+62.8%
$8.07 × 26x P/E
Bull
$216.14
+87.9%
$8.07 × 30x P/E
Key Value Driver
Normalized P/E multiple (26x base case)
Implied Market Multiple
14.3x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $119.67 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $187.32 per share.
Warnings
Dividend-based valuation: $115.30 (below our primary estimate by 45%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $119.67 (from 29 analysts). Our estimate is 75% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples