Allison to Report Q2 Earnings: What's in Store for the Stock?

Allison Transmission Holdings, Inc. ALSN is slated to release second-quarter 2025 results on Aug. 4, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s sales and earnings is pegged at $794.43 million and $2.20 per share, respectively.

The bottom-line projection implies a year-over-year rise of 3.29%. The Zacks Consensus Estimate for Allison’s second-quarter earnings per share has moved down 2 cents in the past 30 days. Its top-line projection implies a year-over-year decline of 2.64%.

ALSN surpassed earnings estimates in each of the trailing four quarters, the average surprise being 8.68%. This is depicted in the graph below:

Allison Transmission Holdings, Inc. Price and EPS Surprise

Allison Transmission Holdings, Inc. price-eps-surprise | Allison Transmission Holdings, Inc. Quote

Q1 Highlights

Allison reported adjusted earnings of $2.23 per share for first-quarter 2025, which beat the Zacks Consensus Estimate of $1.97 and rose 17% year over year. The company’s quarterly revenues of $766 million fell 3% from the year-ago period and missed the Zacks Consensus Estimate of $775 million.

Factors at Play

Allison is seeing robust demand from the North America On-Highway end market, thanks to strong demand for Class 8 vocational vehicles. This segment drove strong revenue growth in 2024, and the company expects to build on this strength in 2025 as well. For 2025, the company expects adjusted EBITDA in the range of $1.17-$1.23 billion, up from $1,165 million in 2024. It expects net income in the band of $735-$785 million, up from $731 million reported in 2024. Strong demand for Class 8 vocational vehicles is likely to have bolstered the company’s performance in the second quarter of 2025.

On the flip side, electrified propulsion initiatives are expected to flare up Allison’s spending levels, thereby clipping cash flows. In 2024, the firm’s R&D costs increased roughly 3% year over year, primarily driven by higher product initiatives spending. The company is expected to see rising R&D expenses this year as well to fund product development across all end markets. While rising R&D expenses will boost long-term prospects, they will put pressure on the company’s profits in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Allison for the to-be-reported quarter, as it does not have the right combination of the two key ingredients. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.

Earnings ESP: Allison has an Earnings ESP of -0.41%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ALSN currently sports a Zacks Rank #3.

Stocks With the Favorable Combination

Here are some players from the auto space that, per our model, have the correct ingredients to post an earnings beat this time around.

Lucid Group, Inc. LCID has an Earnings ESP of +3.08% and a Zacks Rank of 3 at present. The company is set to release second-quarter 2025 results on Aug. 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for LCID’s to-be-reported quarter’s loss per share and revenues is pegged at 22 cents and $253.43 million, respectively. Lucid’s earnings beat estimates in one of the trailing four quarters and missed thrice, the average negative surprise being 6.13%.

Cummins Inc. CMI has an Earnings ESP of +2.79% and a Zacks Rank of 3 at present. The company is set to release second-quarter 2025 results on Aug. 5. 

The Zacks Consensus Estimate for CMI’s to-be-reported quarter’s earnings and revenues is pegged at $4.99 per share and $8.47 billion, respectively. CMI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 14.22%.

Rivian Automotive, Inc. RIVN has an Earnings ESP of +8.53% and a Zacks Rank of 3 at present. The company is set to release second-quarter 2025 results on Aug. 5. 

The Zacks Consensus Estimate for RIVN’s to-be-reported quarter’s loss and revenues is pegged at 65 cents per share and $1.26 billion, respectively. RIVN’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 10.81%.

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This article originally published on Zacks Investment Research (zacks.com).

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