Allison Transmission Holdings, Inc. (NYSE:ALSN) just released its quarterly report and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 11% higher than the analysts had forecast, at US$532m, while EPS were US$0.68 beating analyst models by 23%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Allison Transmission Holdings' eleven analysts is for revenues of US$2.27b in 2021, which would reflect a modest 5.0% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 22% to US$3.68. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.26b and earnings per share (EPS) of US$3.65 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$47.73. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Allison Transmission Holdings analyst has a price target of US$70.00 per share, while the most pessimistic values it at US$35.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Allison Transmission Holdings' past performance and to peers in the same industry. We would highlight that Allison Transmission Holdings' revenue growth is expected to slow, with forecast 5.0% increase next year well below the historical 7.2%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.5% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Allison Transmission Holdings.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Allison Transmission Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Allison Transmission Holdings going out to 2023, and you can see them free on our platform here..
Before you take the next step you should know about the 3 warning signs for Allison Transmission Holdings that we have uncovered.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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