5/9/2023 0 Comments Alison transmissionIn this scenario, Allison Transmission’s NOPAT in 2031 is just $238 million, its lowest NOPAT since 2012 and less than half its 2021 NOPAT.Īllison Transmission Could Reach $134 or Higher In this scenario, Allison Transmission’s NOPAT falls 7% compounded annually from 2022 – 2031, and the stock is worth $40/share today – equal to the current price. 2022 – 2023 consensus estimate CAGR of +9%) compounded annually from 2022 – 2031). NOPAT margin remains at 21% (equal to 2021) from 2022 – 2031, and.In the first scenario, I assume Allison Transmission’s: Below, I use my reverse discounted cash flow (DCF) model to analyze the expectations for future growth in cash flows baked into a couple of stock price scenarios for Allison Transmission. In 4Q21, Allison Transmission’s FCF of $147 million rose 27% YoY and reached its highest level since 1Q19.Īllison Transmission Is Priced for Profits to Fall 60% Below TTM LevelsĪllison Transmission’s price-to-economic book value (PEBV) ratio of 0.4 means the stock is priced for profits to fall, permanently, by 60% from current levels. Even with increased the increased R&D spend, the company generates plenty of free cash flow (FCF). ![]() The company increased its R&D spend in 4Q21 25% YoY to $50 million. Rising R&D Spending Is Likely to Continue: To meet the challenge of adapting to changing demand, Allison Transmission invests heavily in research and development (R&D). The high-end of the guidance would be its largest annual revenue level ever. The midpoint of management’s revenue guidance for 2022 is $2.7 billion, which is equal to 2019. However, the company expects to reach near pre-pandemic levels in 2022. Core Earnings in 2021 were 15% below 2019 levels. Sales and Profits Are Still Below Pre-Pandemic Levels: Despite improvement in 2021 over 2020, Allison Transmission’s 2021 revenue was 11% below 2019. The company is already delivering results with its electric axels used in hybrid busses and electric trucks. Allison Transmission already designs and manufactures hybrid and fully electric propulsion systems, which are designed to extend range. FracTran, which is positioned to grow along the long-term demand for natural gasĮV Is a Growth Opportunity: Allison Transmission’s manufacturing experience, ability to innovate, experience with electric propulsion systems, and industry relationships, position the company to be a key supplier of hybrid and electric propulsion systems.eGen Power series, which are electric axles designed to replace powertrains of conventional trucks and busses.eGen Flex series, which improves fuel economy by 25% versus conventional diesel busses. ![]() ![]()
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