Allison Transmission (NYSE: ALSN) and Oshkosh (NYSE:OSK) are both mid-cap auto/tires/trucks companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, valuation, analyst recommendations, profitability and earnings.
This is a summary of recent recommendations and price targets for Allison Transmission and Oshkosh, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Allison Transmission currently has a consensus target price of $43.70, suggesting a potential upside of 11.37%. Oshkosh has a consensus target price of $94.58, suggesting a potential upside of 12.03%. Given Oshkosh’s stronger consensus rating and higher possible upside, analysts clearly believe Oshkosh is more favorable than Allison Transmission.
Earnings and Valuation
This table compares Allison Transmission and Oshkosh’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Allison Transmission||$2.26 billion||2.43||$504.00 million||$3.41||11.51|
|Oshkosh||$6.83 billion||0.92||$285.60 million||$4.16||20.30|
Allison Transmission has higher earnings, but lower revenue than Oshkosh. Allison Transmission is trading at a lower price-to-earnings ratio than Oshkosh, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
92.4% of Oshkosh shares are held by institutional investors. 7.9% of Allison Transmission shares are held by insiders. Comparatively, 1.6% of Oshkosh shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This table compares Allison Transmission and Oshkosh’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
Allison Transmission has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Oshkosh has a beta of 1.53, meaning that its stock price is 53% more volatile than the S&P 500.
Allison Transmission pays an annual dividend of $0.60 per share and has a dividend yield of 1.5%. Oshkosh pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Allison Transmission pays out 17.6% of its earnings in the form of a dividend. Oshkosh pays out 23.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Oshkosh has raised its dividend for 3 consecutive years. Allison Transmission is clearly the better dividend stock, given its higher yield and lower payout ratio.
Oshkosh beats Allison Transmission on 9 of the 17 factors compared between the two stocks.
About Allison Transmission
Allison Transmission Holdings, Inc. and its subsidiaries design and manufacture commercial and defense fully-automatic transmissions. The Company manufactures fully-automatic transmissions for medium- and heavy-duty commercial vehicles, and medium-and heavy-tactical United States defense vehicles. The Company’s transmissions are used in a range of applications, including on-highway trucks (distribution, refuse, construction, fire and emergency), buses (primarily school, transit and hybrid-transit), motorhomes, off-highway vehicles and equipment (energy, mining and construction) and defense vehicles (wheeled and tracked). The Company’s transmissions are sold under the Allison Transmission brand name and remanufactured transmissions are sold under the ReTran brand name. The Company has developed over 100 different models that were used in more than 2,500 different vehicle configurations and were compatible with over 500 combinations of engines, as of December 31, 2016.
Oshkosh Corporation is a manufacturer and marketer of access equipment, specialty vehicles and truck bodies for the primary markets of defense, concrete placement, refuse hauling, access equipment, and fire and emergency. The company’s brands include Oshkosh, JLG, Pierce, McNeilus, IMT, Frontline, Jerr-Dan, CON-E-CO and London. The Company operates through four segments: Access equipment, Defense, Fire & emergency and Commercial. The Access equipment segment provides aerial work platforms and telehandlers to position workers and materials at elevated heights. The Defense segment provides supply parts and services and wheeled vehicles. The Fire & Emergency segment manufactures and markets commercial and custom fire vehicles, simulators and emergency vehicles. The Commercial segment manufactures, markets and distributes concrete mixers, portable concrete batch plants, and vehicle and vehicle body components.
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