Allison Transmission awarded multi-million contract for defense program

INDIANAPOLIS - Allison Transmission (NYSE:ALSN), a $7.25 billion market cap company with $3.2 billion in annual revenue, has secured a multi-million dollar contract from the Ground Vehicle Systems Center (GVSC) for the second phase of the Next Generation Electrified Transmission (NGET) program, the company announced Tuesday. According to InvestingPro analysis, Allison maintains strong profitability with a 48% gross margin and appears undervalued based on its Fair Value assessment.

The second phase will focus on enhancing the eMachine and Inverter system to achieve flexible power modes, aiming to reduce noise and improve capabilities of electrified vehicle fleets. This follows the NGET Phase 1, which concentrated on design, development and testing of an electric hybrid sub-system. InvestingPro data shows the company trades at an attractive P/E ratio of 9.8, suggesting strong value potential for investors interested in defense sector opportunities.

"The advancements in the eMachine and Inverter system will build on the success of Phase 1, bringing us one step closer to delivering propulsion systems that meet the performance and efficiency needs of modern armored combat vehicles," said Dana Pittard, Vice President of Defense Programs at Allison Transmission, according to the press release.

The NGET program is part of Allison’s broader development of advanced propulsion solutions, including the eGen Force, which was selected by American Rheinmetall for the XM30 program. The eGen Force transmission is scalable to 75-ton tracked vehicles and features a high-efficiency range pack that utilizes eight forward and three reverse gears.

The system generates 220 kilowatts of electrical power and combines an internal combustion engine with an electric motor. This hybrid approach enables silent mobility and reduction in thermal and acoustic signatures for tactical operations while maintaining extended range capabilities.

Allison Transmission, headquartered in Indianapolis, designs and manufactures propulsion solutions for commercial and defense vehicles. The company maintains a healthy 1.26% dividend yield and has raised its dividend for five consecutive years. For deeper insights into Allison’s financial health and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports, available for over 1,400 US stocks.

In other recent news, Allison Transmission has been actively involved in several significant developments. The company announced its agreement to acquire Dana Incorporated’s Off-Highway business for $2.7 billion, a move that is expected to broaden Allison’s market reach into construction, forestry, agriculture, and industrial sectors. This acquisition is subject to regulatory approvals and is anticipated to close in late fourth quarter of 2025. In terms of analyst activity, BofA Securities raised its price target for Allison Transmission to $79 from $74, maintaining an Underperform rating. Meanwhile, Raymond James adjusted its price target to $105 from $110, citing challenges in the North American on-highway market but retaining an Outperform rating.

Additionally, Allison Transmission has secured an order for its 3040 MX transmissions from Poland for the Borsuk Infantry Fighting Vehicle program, following a Memorandum of Understanding with Poland’s Grupa Zbrojeniowa. The Maryland Department of Transportation has also chosen New Flyer buses equipped with Allison’s eGen Flex hybrid propulsion system for its Baltimore operations. These buses, slated for manufacture in 2025, feature geofencing technology that allows engine-off operation for up to half of their routes, reducing emissions and noise.

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