Shares of Allison Transmission (NYSE: ALSN) soared 13.9% on Wednesday after the commercial-duty transmission manufacturer announced strong fourth-quarter results.
Allison Transmission caps a record year
Allison Transmission's fourth-quarter 2023 revenue grew 7.9% year over year to $775 million, translating to a 26% increase in net income to $170 million, or $1.91 per share. Wall Street analysts, on average, were only expecting quarterly earnings of $1.43 per share on revenue of $745 million.
Company Chairman and CEO David Graziosi noted it was a record year led by "strong demand in our largest end markets." Indeed, Allison Transmission saw net sales climb 13% to $1.529 billion in its North America On-Highway end market and an 18% increase to $696 million from service parts, support equipment, and other related products sales. The company also drove a 14% increase to $166 million in net sales from its Defense segment.
Allison Transmission's per-share earnings were also bolstered by repurchases of $260 million of common stock in 2023 -- a move that reduced its total outstanding share count by nearly 6%.
What's next for Allison Transmission stock?
For full-year 2024, Allison Transmission issued guidance for net sales ranging from $3.05 billion to $3.15 billion -- well above current estimates for 2024 revenue of $3.03 billion -- with net income of $635 million to $685 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $700 million to $760 million.
All told, this was an impressive end to a strong year for Allison Transmission. And even with shares up 35% over the past year leading into this report, it's hardly surprising to see the stock extending its rally today.
Should you invest $1,000 in Allison Transmission right now?
Before you buy stock in Allison Transmission, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Allison Transmission wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 12, 2024
Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Allison Transmission. The Motley Fool has a disclosure policy.
