ALSN
Allison Transmission Holdings, Inc.
$109.87
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 41.3% below fair value
You pay
$109.87
Bear
$158.25
Fair
$187.03
Bull
$215.80
Bear
$158.25
+44.0%
$8.07 × 22x P/E
Fair
$187.03
+70.2%
$8.07 × 26x P/E
Bull
$215.80
+96.4%
$8.07 × 30x P/E
Key Value Driver
Normalized P/E multiple (26x base case)
Implied Market Multiple
13.6x
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 $118.50 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $187.03 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 $118.50 (from 29 analysts). Our estimate is 77% 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