Is Allison Transmission Holdings, Inc. overvalued or undervalued?

As of 8 May 2025, the valuation grade for Allison Transmission Holdings, Inc. has moved from fair to attractive, indicating a positive shift in its valuation outlook. The company is currently considered undervalued, supported by a P/E ratio of 12, a PEG ratio of 0.80, and an impressive ROE of 45.00%. These metrics suggest strong profitability and growth potential relative to its price.
In comparison to its peers, Allison Transmission's P/E ratio of 10.51 is notably lower than that of Autoliv, Inc. at 15.26 and Donaldson Co., Inc. at 23.66, both of which are categorized as expensive. Additionally, its EV to EBITDA ratio of 9.22 is more favorable than Aptiv Plc's 6.85, reinforcing the attractiveness of Allison's valuation. Despite recent underperformance relative to the S&P 500 over the past month, the company has shown significant long-term gains, with a 3-year return of 154.05% compared to the S&P 500's 58.74%.