Allison Transmission rises 5.2% after third-quarter results and raised guidance

What happened

Allison Transmission (ALSN) rose 5.2% on November 3, 2026, after reporting third-quarter results and raising full-year guidance because of stronger sales tied to the January 1, 2026, acquisition. The company reported consolidated net sales of $1,534 million in the quarter, net income of $191 million and diluted EPS of $2.90, according to Seeking Alpha and Zacks Investment Research.

How big was the move

The stock opened 3.9% above the previous close and closed at $118.92, with trading volume 3.0 times its 20-day average. The session move was 2.7 times a typical daily move for this stock. Over the last five trading sessions the stock rose 10.4%, while the S&P 500 rose 0.4% on the day and the Consumer Cyclical sector median fell 1.5%, leaving the stock 6.6 percentage points better than the sector median.

The technical picture

The stock traded above several moving averages, sitting 7.7% above its 20-day moving average, 1.6% above its 50-day moving average and 0.3% above its 200-day moving average. The 50-day average remained below the 200-day average, a sign of a weak longer-term trend. The Relative Strength Index (14 days) was 62, in a neutral range, and the shares were 13.6% below the 52-week high.

Shorter-term performance was mixed: the stock rose 2.7% over one month and 0.7% over three months, while it rose 44.1% over one year, which is 33.4 percentage points ahead of the S&P 500. Volatility was 30% annualized over 60 days, higher than 55% of its own readings over five years, and the stock has a beta of 0.81, indicating it tends to move less than the market.

Fundamentals and valuation

For the four quarters through September 30, 2026, Allison reported revenue of $4.54 billion, which grew 47.8% from a year earlier, and diluted earnings per share of $6.96, which fell 14.7% from a year earlier. Gross margin narrowed to 36.1% from 48.3% a year earlier, and operating margin was 22.5% versus 30.8% a year earlier, reflecting a step-up in sales mix and integration costs tied to the acquisition. Free-cash-flow margin was 18.2% and return on invested capital was 9.6%.

The balance sheet shows net debt of 2.9 times EBITDA. Valuation metrics place the stock at 17.1 times trailing earnings and 14.6 times expected earnings, with a free-cash-flow yield of 9.2%. Its price to trailing earnings is higher than 90% of its own readings over the past five years, with a five-year median of 9.9 times earnings, leaving the shares relatively expensive on a historical basis despite solid cash returns.

Earnings and analyst expectations

Allison reported on November 2, 2026, EPS of $2.90 against $2.32 expected, 25.0% above estimates, and management raised full-year 2026 guidance for revenue, earnings and cash flow for the second consecutive quarter. The company said its legacy Allison Transmission business achieved record quarterly net sales of $881 million, and management noted expected benefits from the integration of the January 1, 2026, acquisition.

The company has one consecutive quarter beating estimates and an average surprise over the last four reports of 11.8% below estimates. The typical two-day reaction after recent reports was that the stock rose 0.5%. Analysts’ consensus price target is $127.00, 6.8% above the closing price, based on 29 analysts; 28% of those analysts rate the stock Buy or Strong Buy and the consensus rating is Hold.

What to watch

• November 4, 2026: the next report date listed in the data
• Management commentary on expected benefits from the January 1, 2026, acquisition and its impact on margins and cash flow
• Trends in legacy Allison Transmission quarterly net sales, which were reported at $881 million for the quarter
• Net debt relative to EBITDA and any updates to leverage targets
• Changes in analyst estimates and the consensus rating following the raised guidance