Comparing Allison Transmission (ALSN) & Autoliv (ALV)

Allison Transmission (NYSE: ALSN) and Autoliv (NYSE:ALV) are both auto/tires/trucks companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Insider & Institutional Ownership

39.7% of Autoliv shares are owned by institutional investors. 8.4% of Allison Transmission shares are owned by company insiders. Comparatively, 0.3% of Autoliv shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Allison Transmission pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Autoliv pays an annual dividend of $2.48 per share and has a dividend yield of 1.6%. Allison Transmission pays out 22.6% of its earnings in the form of a dividend. Autoliv pays out 37.7% 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. Autoliv has raised its dividend for 8 consecutive years. Autoliv is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Allison Transmission and Autoliv, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allison Transmission 3 4 5 0 2.17
Autoliv 4 10 8 0 2.18

Allison Transmission currently has a consensus target price of $44.00, indicating a potential upside of 5.79%. Autoliv has a consensus target price of $135.63, indicating a potential downside of 14.80%. Given Allison Transmission’s higher probable upside, analysts clearly believe Allison Transmission is more favorable than Autoliv.

Profitability

This table compares Allison Transmission and Autoliv’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allison Transmission 23.58% 71.50% 11.22%
Autoliv 3.87% 13.63% 6.66%

Earnings and Valuation

This table compares Allison Transmission and Autoliv’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Allison Transmission $2.26 billion 2.53 $504.00 million $2.66 15.64
Autoliv $10.38 billion 1.34 $427.10 million $6.58 24.19

Allison Transmission has higher earnings, but lower revenue than Autoliv. Allison Transmission is trading at a lower price-to-earnings ratio than Autoliv, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Allison Transmission has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500. Comparatively, Autoliv has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500.

Summary

Autoliv beats Allison Transmission on 9 of the 17 factors compared between the two stocks.

About Allison Transmission

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells commercial and defense fully-automatic transmissions for medium- and heavy-duty commercial vehicles, and medium- and heavy-tactical U.S. defense vehicles worldwide. It offers 13 transmission product lines with approximately 100 product models for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school, transit, and hybrid-transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. The company markets its transmissions under Allison Transmission brand name; and remanufactured transmissions under ReTran brand name. It also sells branded replacement parts, support equipment, and other products necessary to service the installed base of vehicles utilizing its transmissions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. The company serves customers through an independent network of approximately 1,400 independent distributor and dealer locations. The company was formerly known as Clutch Holdings, Inc. Allison Transmission Holdings, Inc. was founded in 1915 and is headquartered in Indianapolis, Indiana.

About Autoliv

Autoliv, Inc., through its subsidiaries, develops, manufactures, and supplies automotive safety systems to the automotive industry worldwide. The company operates through two segments, Passive Safety and Electronics. It offers modules and components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels, inflator technologies, battery cable cutters, pedestrian protection systems, and child seats. The company also provides restraint control electronics and crash sensors for deployment of airbags and seatbelt pretensioners; active safety sensors and software for advanced driver assistance systems and autonomous driving solutions; and brake control systems. It primarily serves car manufacturers. The company was founded in 1953 and is headquartered in Stockholm, Sweden.

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