Allison Buys Dana's Off-Highway Unit: Why ALSN Is Worth Holding Now

Allison Transmission Holdings, Inc. ALSN, a global leader in high-performance mobility and work solutions, has completed the acquisition of Dana Inc.’s (DAN) Off-Highway Drive & Motion Systems business for approximately $2.7 billion. DAN, a leading provider of drivetrain and propulsion solutions, and ALSN will now combine to form a global enterprise with industry-leading products and advanced technologies, generating $5.5 billion in revenues and operating across 29 countries.

With the buyout, ALSN has enhanced its growth prospects and strengthened its position as a global provider of commercial duty mobility. The company’s portfolio will benefit from high-quality and reliable products that will continue to deliver strong financial performance.

The combined company will be based in Indianapolis and operate under ALSN with two major business units comprised of Allison Transmission and Allison Off-Highway Drive & Motion Systems.

Let’s find out why ALSN stock is worth retaining at the moment.

Defense Spending & Expansion Support ALSN

Allison is well-positioned to benefit from rising global defense budgets. Defense sales surged 47% year over year in the third quarter of 2025, well supported by expanding programs in the United States and abroad.

The 3040MX platform is emerging as a key growth driver and was selected for India’s Future Infantry Combat Vehicleprogram, a $100M+ opportunity over 20 years. The company also secured a new contract to supply 3040MX cross-drive transmissions for Poland’s Infantry Fighting Vehicle program. ALSN’s expansion through partners, such as WZM in Poland and FNSS in Turkey, strengthens its reach and deepens its position in a structurally growing global defense market.

Allision through the “Make in India” initiatives, recently signed a Memorandum of Understanding (MoU) with Armoured Vehicles Nigam Limited (“AVNL”), a government-owned defense manufacturer, to establish a Maintenance, Repair and Overhaul center in India. With this strategy, ALSN will continue to expand its footprint in India through planned initiatives across multiple sectors.

International On-Highway remains one of Allison’s largest untapped opportunities, with the company highlighting its very low penetration and the significant room for growth across regions. Allison’s expansion represents a major long-term growth opportunity while strengthening OEM relationships, expanding local engagement, and improving regional support capabilities, including new China production capacity that enhances competitiveness in Asia.

Recent deployments in Brazil further show the traction the company is building outside North America. The Dana Off-Highway acquisition will also result in a broader global footprint with open access to additional customers and markets.

Allison’s continued focus on advanced technology and innovation in product development has given a positive signal among its customers. Customer wins, such as PACCAR standardizing Neutral-at-Stop on Kenworth and Peterbilt models, reinforce the value of Allison’s fuel-saving features. ALSN’s eGen Power portfolio, comprising 100S, 100D, 130S, 85S and 130D e-axles, demonstrates its ability to adapt to the changing dynamics of the auto industry.

In particular, the eGen Flex portfolio and the eGen Force portfolio are driving Allison’s prospects. Allison’s eGen Force has been chosen by American Rheinmetall for the Optionally Manned Fighting Vehicle program, now in development, with U.S. testing set for 2026 and production starting in 2029.

Allison’s investor-friendly actions continue to build investor confidence. Last year, the company announced an 8% increase in its quarterly dividend — its sixth consecutive annual raise — and a $1 billion boost to its stock repurchase authorization. Since 2019, the quarterly dividend has risen over 80%. In the first nine months of 2025, Allison repurchased more than $283 million of common stock, with approximately $1.24 billion in remaining repurchase authorization.

Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise

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

Zacks Rank & Key Picks

ALSN currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Atmus Filtration Technologies Inc. ATMU, OPENLANE, Inc. OPLN and PHINIA Inc. PHIN, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ATMU’s 2025 sales and earnings indicates year-over-year growth of 4.3% and 5.6%, respectively. EPS estimates for 2025 and 2026 have improved 7 cents and 12 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for OPLN’s 2025 sales and earnings indicates year-over-year growth of 9.4% and 48.2%, respectively. EPS estimates for 2025 and 2026 have improved 9 cents and 11 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for PHIN’s 2025 sales and earnings indicates year-over-year growth of 1.1% and 33.4%, respectively. EPS estimates for 2025 and 2026 have improved 47 cents and 14 cents, respectively, in the past 30 days.

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

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