Allison Transmission Holdings Inc

Allison Transmission reported second-quarter adjusted earnings of $2.73 per share, up 19.2% year over year and above the Zacks Consensus Estimate of $2.60, while revenues surged 92% to $1,566 million, beating expectations. The top-line growth was driven by the addition of Allison Off-Highway, which contributed $706 million in sales, and record quarterly sales in the legacy Transmission unit, which generated $860 million. The company raised its full-year 2026 net sales guidance to $5.8-$6.0 billion and adjusted EBITDA to $1.465-$1.575 billion, while narrowing net income to $600-$700 million. Management also reaffirmed its $120 million annual run-rate synergy target from the Off-Highway acquisition, with 90% of identified synergies already in execution. Shares have risen 0.1% since the earnings report, outperforming the S&P 500, but estimates have trended downward, and the stock holds a Zacks Rank #3 (Hold).

Heavy transportation equipment stocks reported a satisfactory second quarter, with revenues beating analysts' consensus estimates by 2.2% and next quarter's revenue guidance coming in 8.6% above expectations. Greenbrier was the weakest performer, with revenues of $576.5 million, down 31.6% year over year and missing estimates by 5.9%, while Wabash was the best, with revenues of $417.2 million, down 9.1% year over year but beating estimates by 3.6%. Allison Transmission delivered the fastest revenue growth of the group, up 92.4% year over year to $1.57 billion, and its stock is up 8.6% since reporting. On average, share prices of the 12 tracked companies are down 3.9% since the latest earnings results.

Allison Transmission reported second-quarter 2026 revenue of $1.57 billion, exceeding analyst expectations and marking a 92.4% year-on-year increase. The company lifted its full-year revenue guidance to $5.9 billion at the midpoint, which is 1.6% above analysts' estimates. GAAP earnings per share came in at $2.15, missing consensus estimates by 13%. Adjusted EBITDA was $404 million, beating expectations, while the full-year EBITDA guidance midpoint of $1.52 billion also topped analyst forecasts.

Allison Transmission Holdings reported second quarter 2026 net sales of $1,566 million, a 92% increase year over year, driven by the addition of the Allison Off-Highway business unit acquired on January 1, 2026. The Allison Transmission business unit achieved record quarterly net sales of $860 million, while the Allison Off-Highway unit contributed $706 million in net sales. Net income was $181 million, or $2.15 per diluted share, compared to $195 million a year earlier, while adjusted diluted EPS rose 8% to $2.73. Adjusted EBITDA increased 29% to $404 million, representing a 26% margin, and the company generated record quarterly adjusted free cash flow of $281 million. Allison also raised its full-year 2026 guidance, now expecting consolidated net sales between $5,800 million and $6,000 million and adjusted EBITDA between $1,465 million and $1,575 million.

Allison Transmission has secured a $250 million contract to supply 4040 MX transmissions for BAE Systems Hägglunds' CV90 MkIV infantry fighting vehicles. The agreement, which marks the largest tracked defense order in the company's history, also includes a $50 million option for additional units. The 4040 MX is an evolution of the existing 3040 MX, offering increased power and updated electronic controls while maintaining the same physical footprint for seamless engine integration. Deliveries are scheduled to commence in 2028.

Allison Transmission shares rallied 4.2% to close at $117.46, driven by a record $250 million contract with BAE Systems to supply 4,040 MX transmissions for CV90 MkIV infantry fighting vehicles, with an additional $50 million option. This is the company's largest tracked defense program deal to date. The stock's move came on higher-than-usual trading volume and follows a 2.9% decline over the past four weeks. Allison Transmission is expected to report quarterly earnings of $2.55 per share, up 11.4% year-over-year, on revenues of $1.5 billion, an 84.7% increase. The consensus EPS estimate has remained unchanged over the last 30 days, and the stock carries a Zacks Rank #3, or Hold.

S&P Dow Jones Indices announced that Allison Transmission Holdings will replace Goodyear Tire & Rubber in the S&P MidCap 400, and Goodyear Tire & Rubber will replace Stellar Bancorp in the S&P SmallCap 600, effective before trading opens on Monday, July 6. The changes are driven by S&P MidCap 400 constituent Prosperity Bancshares acquiring Stellar Bancorp in a deal expected to close July 1. Allison Transmission, classified in the Industrials sector, will be added to the MidCap 400, while Goodyear, in Consumer Discretionary, moves to the SmallCap 600. Stellar Bancorp, a Financials sector company, will be removed from the SmallCap 600.