Are Investors Undervaluing Allison Transmission (ALSN) Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Allison Transmission (ALSN). ALSN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 9.68. This compares to its industry's average Forward P/E of 10.60. Over the past year, ALSN's Forward P/E has been as high as 11.84 and as low as 8.35, with a median of 10.11.
ALSN is also sporting a PEG ratio of 0.97. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALSN's industry currently sports an average PEG of 1.17. ALSN's PEG has been as high as 1.18 and as low as 0.83, with a median of 1.01, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Allison Transmission is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ALSN feels like a great value stock at the moment.
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