TacticScaleWhat Allison Transmission Does & How It Makes Money (ALSN)
Updated October 2026 · reflects Allison Transmission's latest reported financials
Maker of automatic transmissions for commercial and defense vehicles. It earns revenue by selling transmissions and electric propulsion systems to vehicle manufacturers and the U.S.
How Allison Transmission makes money
It earns revenue by selling transmissions and electric propulsion systems to vehicle manufacturers and the U.S. government. It also earns ongoing aftermarket income from replacement parts, remanufactured units, extended coverage, defense kits, and engineering services across its installed base.
What Allison Transmission does
Allison Transmission Holdings, founded in 1915 and headquartered in Indianapolis, Indiana, specializes in fully automatic transmissions for medium- and heavy-duty commercial vehicles and medium- and heavy-tactical U.S. defense vehicles. Its products serve a wide range of uses, including distribution, refuse, construction, fire, and emergency trucks; school and transit buses; motor homes; off-highway equipment for energy, mining, and construction; and wheeled and tracked defense vehicles. The company also offers electrified propulsion systems. In addition to new units sold under the Allison Transmission brand, the company serves its installed base with ReTran remanufactured transmissions, branded replacement parts, support equipment, and aluminum die cast components. It also sells defense kits, engineering services, and extended transmission coverage to OEMs, distributors, and the U.S. government.
Products & services
- Allison Transmission fully automatic transmissions
- Allison electrified propulsion systems
- ReTran remanufactured transmissions
- Branded replacement parts and support equipment
- Defense vehicle transmissions and kits
- Extended transmission coverage services
What is Allison Transmission worth?
On an owner-earnings DCF, Allison Transmission's most-likely value is about $150 versus a recent price near $110 (37% below fair value). But TacticScale only calls a stock undervalued when the price sits below its conservative no-growth floor (~$84) with a margin of safety — so the honest verdict here is “Fairly priced — no edge.” Fair value earns its keep only at the extremes, not in the wide middle.
Price sits in the normal range — fair value isn't actionable here; it earns its keep only when price drops below the no-growth floor, or runs to roughly double the optimistic case.
⚠ High leverage — net debt is 5.2× annual cash flow. Net debt is subtracted from this fair value, but refinancing at higher rates, principal timing, and share dilution aren’t modeled — the equity can be worth far less if cash flow weakens.
Analysis, not advice. Fair value is a margin-of-safety estimate from a deterministic owner-earnings DCF, not a price target or recommendation. See the full breakdown →
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