Allison Transmission Holdings (ALSN) & Terex Corporation (TEX) Critical Comparison
Allison Transmission Holdings (NYSE: ALSN) and Terex Corporation (NYSE:TEX) are both mid-cap auto/tires/trucks companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.
Insider and Institutional Ownership
97.4% of Terex Corporation shares are owned by institutional investors. 7.9% of Allison Transmission Holdings shares are owned by company insiders. Comparatively, 2.5% of Terex Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This is a summary of current ratings for Allison Transmission Holdings and Terex Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Allison Transmission Holdings||2||6||4||0||2.17|
Allison Transmission Holdings presently has a consensus target price of $39.63, suggesting a potential upside of 18.32%. Terex Corporation has a consensus target price of $36.15, suggesting a potential downside of 8.59%. Given Allison Transmission Holdings’ higher probable upside, equities research analysts plainly believe Allison Transmission Holdings is more favorable than Terex Corporation.
This table compares Allison Transmission Holdings and Terex Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Allison Transmission Holdings||14.32%||31.27%||6.77%|
Risk and Volatility
Allison Transmission Holdings has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, Terex Corporation has a beta of 1.84, meaning that its share price is 84% more volatile than the S&P 500.
Allison Transmission Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 1.8%. Terex Corporation pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. Allison Transmission Holdings pays out 33.7% of its earnings in the form of a dividend. Terex Corporation pays out -50.8% 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. Allison Transmission Holdings has raised its dividend for 3 consecutive years and Terex Corporation has raised its dividend for 4 consecutive years.
Earnings & Valuation
This table compares Allison Transmission Holdings and Terex Corporation’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Allison Transmission Holdings||$1.98 billion||2.52||$707.40 million||$1.78||18.81|
|Terex Corporation||$4.22 billion||0.84||$152.10 million||($0.63)||-62.78|
Allison Transmission Holdings has higher revenue, but lower earnings than Terex Corporation. Terex Corporation is trading at a lower price-to-earnings ratio than Allison Transmission Holdings, indicating that it is currently the more affordable of the two stocks.
Allison Transmission Holdings beats Terex Corporation on 9 of the 17 factors compared between the two stocks.
About Allison Transmission Holdings
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.
About Terex Corporation
Terex Corporation is a manufacturer of lifting and material processing products and services that deliver lifecycle solutions. The Company has three business segments: Aerial Work Platforms (AWP), Cranes and Materials Processing (MP). It delivers lifecycle solutions to a range of industries, including the construction, infrastructure, manufacturing, shipping, utility, quarrying and mining industries. The AWP segment designs, manufactures, services and markets aerial work platform equipment, telehandlers and light towers. The AWP segment’s products are used by its customers to construct and maintain industrial, commercial and residential buildings and facilities, and for other commercial operations, as well as in a range of infrastructure projects. The Cranes segment’s products are used by its customers for construction and manufacturing facilities, among others. The MP segment’s products are used by its customers in construction, infrastructure and recycling projects.
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