It has been about a month since the last earnings report for Allison Transmission (ALSN). Shares have added about 7% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Allison Transmission due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Allison Transmission Holdings, Inc. before we dive into how investors and analysts have reacted as of late.
Allison Transmission Q3 Earnings Beat Estimates
Allison reported third-quarter 2025 earnings of $1.63 per share, which missed the Zacks Consensus Estimate of $1.95 and fell 28% year over year. Quarterly revenues of $693 million declined 16% from the year-ago quarter and missed the Zacks Consensus Estimate of $756 million.
Segmental Performance
In the reported quarter, net sales in the North America On-Highway end market fell 28% year over year to $327 million and missed the Zacks Consensus Estimate of $368 million. Demand softness for Class 8 vocational and medium-duty trucks affected results.
The Outside North America On-Highway end market’s net sales were $122 million, a fall of 3% from the corresponding quarter of 2024, due to lower demand in Asia. The metric also missed the Zacks Consensus Estimate of $130.83 million.
Net sales in the Global Off-Highway end market plunged to $7 million from $20 million reported in the year-ago period. The figure missed the Zacks Consensus Estimate of $17.77 million, amid softer demand from the energy, mining and construction sectors outside of North America.
In the reported quarter, net sales in the Defense end market rose 47% year over year to $78 million, driven by higher demand for Tracked vehicle applications, price increases on certain products and the continued execution of growth initiatives. The reported figure also beat the Zacks Consensus Estimate of $60 million.
Net sales in the Service Parts, Support Equipment & Other end markets fell 5% year over year to $159 million in the quarter due to lower demand for aluminum die cast components and support equipment. The reported figure also missed the Zacks Consensus Estimate of $169 million.
Financial Position
Allison reported gross profit of $329 million, which decreased from $396 million in the year-ago quarter due to lower volumes and unfavorable direct material costs.
Adjusted EBITDA in the quarter was $256 million, which decreased from $305 million reported a year ago.
Selling, general and administrative expenses in the quarter were $82 million, down 4% year over year. Engineering, research and development expenses decreased to $43 million from $51 million reported in the third quarter of 2024.
Allison Transmission had cash and cash equivalents of $902 million as of Sept. 30, 2025, up from $781 million recorded as of Dec. 31, 2024. Long-term debt was $2.39 billion, unchanged from 2024-end levels.
Net cash provided by operating activities totaled $228 million. Adjusted free cash flow in the reported quarter totaled $184 million, down from $210 million generated a year ago.
2025 Outlook Revised
Allison Transmission has updated its full-year 2025 outlook. The company now anticipates net sales between $2,975 million and $3,025 million compared with the previous projection of $3,075-$3,175 million. Net income is expected in the range of $620 million to $650 million compared with the prior estimation of $640 to $680 million. Adjusted EBITDA is expected between $1,090 million and $1,125 million compared with the previous estimate of $1,130 million to $1,180 million.
Additionally, net cash provided by operating activities is expected to be in the range of $765 million to $795 million compared with the prior estimated range of $785 million to $835 million. Capital expenditures are projected at $165 million to $175 million. Adjusted free cash flow is now expected between $600 million and $620 million, down from the previous range of $620 million to $660 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.49% due to these changes.
VGM Scores
At this time, Allison Transmission has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Allison Transmission has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Allison Transmission is part of the Zacks Automotive - Original Equipment industry. Over the past month, Autoliv, Inc. (ALV), a stock from the same industry, has gained 1.6%. The company reported its results for the quarter ended September 2025 more than a month ago.
Autoliv reported revenues of $2.71 billion in the last reported quarter, representing a year-over-year change of +5.9%. EPS of $2.32 for the same period compares with $1.84 a year ago.
For the current quarter, Autoliv is expected to post earnings of $2.90 per share, indicating a change of -4.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Autoliv. Also, the stock has a VGM Score of A.
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Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis Report Autoliv, Inc. (ALV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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