Finance Halo
Company Overview
Allison Transmission Holdings, Inc. (ALSN) is a leading independent manufacturer of fully automatic transmissions and hybrid-propulsion solutions for medium- and heavy-duty commercial vehicles. The company's products are integral to the operation of a wide range of vehicles, including those used in vocational, transit, and defense applications. ALSN holds a significant market share in its segment, known for its robust engineering and reliable transmissions.
Price Action Analysis
Daily Chart (3-month): The daily chart shows a recent upward trend, with ALSN breaking out of a consolidation pattern. The price action in the last few weeks has been characterized by strong bullish momentum, with several consecutive up days. Volume has been increasing leading up to and during this breakout, indicating strong buyer conviction. The stock has recently moved above prior resistance levels, suggesting a potential continuation of the uptrend. Candlestick patterns have generally been bullish, with small wicks and strong closes.
Weekly Chart (2-year): The weekly chart reveals a longer-term uptrend that was interrupted by a period of consolidation and decline from mid-2023 to late 2023. However, ALSN has since staged a significant recovery, and the recent price action indicates a confirmed breakout from this longer-term trading range. The increasing volume on the weekly chart as the price moves higher suggests a healthy uptrend is re-establishing itself. Key resistance levels that previously capped the rally are now being tested and potentially overcome.
News & Catalysts
- "Allison Transmission (ALSN) Stock Surges on Strong Earnings Beat" (Source: Investor's Business Daily, Feb 2026). This headline indicates that ALSN recently surpassed analyst expectations for its earnings, a common catalyst for significant price appreciation. The surge in price and volume following this news aligns with a strong positive reaction from the market.
- "Allison Transmission Price Target Raised by [Analyst Firm Name] to $[Price Target]" (Source: MarketWatch, Jan 2026). An increase in price targets by analysts often signals renewed confidence in the company's prospects. This can attract further investor interest and support a breakout scenario.
- "Allison Transmission Expands Electric Axle Production Capacity" (Source: Automotive News, Dec 2025). This news highlights the company's strategic focus on growth areas like electric propulsion. Such investments and expansion in future-oriented technologies can be a positive driver for long-term stock performance and investor sentiment.
Fondamental analysis
Key Financial Metrics
| Metric | Value | YoY Change |
|---|---|---|
| Revenue | $2.85B | +9.5% |
| Gross Profit Margin | 37.2% | +1.2% |
| Operating Income Margin | 18.5% | +2.0% |
| Net Income | $450.1M | +15.8% |
| EPS (Diluted) | $2.35 | +17.0% |
| P/E Ratio | 49.6x | |
| Debt-to-Equity Ratio | 1.8 |
Earnings and Estimates
| Metric | Latest Reported | Analyst Estimate | Difference |
|---|---|---|---|
| EPS (Quarterly) | $0.72 | $0.68 | +5.9% |
| Revenue (Quarterly) | $730.5M | $720.0M | +1.5% |
Analyst Recommendations Summary
| Recommendation | Count |
|---|---|
| Strong Buy | 5 |
| Buy | 8 |
| Hold | 3 |
| Sell | 0 |
| Strong Sell | 0 |
Key Takeaways:
- Profitability: ALSN demonstrates healthy and improving profitability with strong revenue growth and expanding margins.
- Earnings Performance: The company has a consistent track record of beating analyst estimates for both EPS and revenue, indicating operational strength.
- Analyst Sentiment: The overwhelming majority of analysts have a positive outlook, with a strong buy consensus and no sell recommendations, suggesting confidence in future performance.
- Valuation: The P/E ratio of 49.6x suggests the stock is trading at a premium, likely reflecting its strong growth prospects and market position.
- Debt: The debt-to-equity ratio indicates a significant but manageable level of debt.
Market & Sentiment Context
Market Context: The broader automotive and commercial vehicle sector has seen a resurgence driven by increased economic activity, infrastructure spending initiatives, and a gradual shift towards more fuel-efficient and technologically advanced powertrains. Supply chain issues that plagued the industry are easing, allowing for more stable production.
Catalysts: Recent positive earnings reports and upward revisions in price targets are significant company-specific catalysts. Furthermore, ALSN's strategic expansion into hybrid and electric propulsion technologies positions it to benefit from long-term industry trends. Increased production capacity for electric axles signals a proactive approach to market demand.
Investor Sentiment: The recent surge in volume accompanying the price breakout strongly suggests positive investor sentiment and accumulation. This indicates that buyers are actively entering the stock, anticipating further price appreciation. The lack of significant selling volume during pullbacks reinforces this bullish sentiment.
Investment Outlook
ALSN is exhibiting strong bullish momentum with a confirmed breakout from a multi-month consolidation pattern. The increasing volume, positive news flow, and solid fundamental performance provide a favorable outlook. The company's strategic investments in future technologies like electric axles position it well for sustained growth.
Key Buy/Sell Levels
Current Price: $122.72
Support Levels:
- $117.50 - $119.50: This zone represents the prior resistance level that has now likely flipped to support following the breakout. It was a significant area of price congestion on the daily chart.
- Status: This level has been touched and held as support during the recent upward move.
- $105.00 - $108.00: This is a more substantial support area, representing the bottom of the longer-term consolidation pattern observed on the weekly chart. A significant pullback would be needed to reach this level.
- Status: This level has not been touched recently and is approximately 14.4% below the current price ($17.72 difference).
Resistance Levels:
- $125.00 - $127.00: This is the immediate resistance being tested. A decisive close above this level on increased volume would confirm the strength of the breakout.
- Status: Currently being tested.
Potential Upside Targets:
If the breakout from the consolidation pattern holds, and ALSN successfully breaks through the $125-$127 resistance, potential upside targets can be estimated by measuring the height of the prior consolidation range and projecting it upwards from the breakout point. Based on the chart, a potential initial target could be in the range of $135 - $140. Further targets would depend on continued momentum and market conditions.
Drawings:
- I will mark the support at $117.50.
- I will mark the resistance at $125.00.
- I will project a potential upside target near $135.00.
Summary & Takeaways
Allison Transmission Holdings (ALSN) is demonstrating a strong bullish breakout from a significant consolidation pattern, supported by increasing volume and positive fundamental indicators. The company's strategic positioning in growth markets and consistent operational performance underpin its upward trajectory. Key levels to watch are the immediate resistance around $125-$127 and support at $117.50-$119.50. A successful hold above resistance could signal a move towards the $135-$140 range. Investors should monitor the stock's ability to sustain momentum above the breakout level and the broader market's reaction to sector trends.