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Why Allison Transmission (ALSN) is Poised to Beat Earnings Estimates Again


Looking for a stock that might be in a good position to beat earnings at its next report? Consider Allison Transmission Holdings, Inc. ALSN, a firm in the Automotive – Original Equipment industry, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, ALSN has beaten estimates by at least 35% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, ALSN was expected to post earnings of 48 cents per share, while it actually produced 75 cents per share, a beat of 56.3%. Meanwhile, for the most recent quarter, the company looked to deliver earnings of 59 cents per share, when it actually saw 81 cents per share instead, representing a 37.3% positive surprise.

Allison Transmission Holdings, Inc. Price and EPS Surprise

Allison Transmission Holdings, Inc. Price and EPS Surprise | Allison Transmission Holdings, Inc. Quote

Thanks in part to this history, recent estimates have been moving higher for Allison Transmission. In fact, the Earnings ESP for ALSN is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for ALSN, as the firm currently has a Zacks Earnings ESP of +4.55%, so another beat could be around the corner.

This is particularly true when you consider that ALSN has a great Zacks Rank #1 (Strong Buy), which can be a harbinger of outperformance and a signal for a strong earnings profile. You can see the complete list of today’s Zacks #1 Rank stocks here.

When you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that ALSN could see another beat at its next report, especially if recent trends are any guide.

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