What a fantastic six months it’s been for Allison Transmission. Shares of the company have skyrocketed 57.4%, setting a new 52-week high of $129.89. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now the time to buy Allison Transmission, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is Allison Transmission Not Exciting?
We’re happy investors have made money, but we don't have much confidence in Allison Transmission. Here are two reasons you should be careful with ALSN and a stock we'd rather own.
1. Revenue Growth Flatlining
Long-term growth is the most important, but within industrials, a stretched historical view may miss new industry trends or demand cycles. Allison Transmission’s recent performance shows its demand has slowed as its revenue was flat over the last two years. 
2. EPS Growth Has Stalled Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Allison Transmission’s EPS was flat over the last two years, just like its revenue. This performance was underwhelming across the board.
Final Judgment
Allison Transmission’s business quality ultimately falls short of our standards. After the recent surge, the stock trades at 14.1× forward P/E (or $129.89 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment. We’d suggest looking at the most entrenched endpoint security platform on the market.
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