Allison Transmission Earnings: Vocational Trucks Drive Strong Third Quarter for On-Highway Segments

Allison Transmission’s third-quarter results posted quarterly records for revenue and EPS. The company’s largest segment, North America on-highway, continues to benefit from strong end market demand, particularly in Class 8 vocational vehicles, a segment well suited for automatic transmissions. Total company revenue increased 12% year over year to $824 million, and diluted earnings per share rose 29% to $2.27, both well above the LSEG consensus of $790 million and $2.02, respectively, which sent the stock up over 2.5% in Oct. 29 after-hours trading. After adjusting our 2024 projections for better-than-expected revenue growth in North America on-highway and the time value of money, we raise our per share fair value estimate to $92 from $87.