Analyzing Allison Transmission (ALSN) & Honeywell International (HON)
Allison Transmission (NYSE: HON) and Honeywell International (NYSE:HON) are both auto/tires/trucks companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, analyst recommendations, profitability, institutional ownership, risk, dividends and earnings.
Volatility & Risk
Allison Transmission has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500. Comparatively, Honeywell International has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for Allison Transmission and Honeywell International, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Allison Transmission currently has a consensus price target of $45.64, suggesting a potential downside of 14.60%. Honeywell International has a consensus price target of $172.88, suggesting a potential upside of 3.31%. Given Honeywell International’s stronger consensus rating and higher probable upside, analysts plainly believe Honeywell International is more favorable than Allison Transmission.
Allison Transmission pays an annual dividend of $0.60 per share and has a dividend yield of 1.1%. Honeywell International pays an annual dividend of $2.98 per share and has a dividend yield of 1.8%. Allison Transmission pays out 22.6% of its earnings in the form of a dividend. Honeywell International pays out 41.9% 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. Honeywell International has raised its dividend for 7 consecutive years. Honeywell International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Allison Transmission and Honeywell International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider and Institutional Ownership
74.6% of Honeywell International shares are held by institutional investors. 8.4% of Allison Transmission shares are held by insiders. Comparatively, 1.3% of Honeywell International shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Earnings and Valuation
This table compares Allison Transmission and Honeywell International’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||3.08||$504.00 million||$2.66||20.09|
|Honeywell International||$40.53 billion||3.07||$1.66 billion||$7.11||23.54|
Honeywell International has higher revenue and earnings than Allison Transmission. Allison Transmission is trading at a lower price-to-earnings ratio than Honeywell International, indicating that it is currently the more affordable of the two stocks.
Honeywell International beats Allison Transmission on 10 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 Honeywell International
Honeywell International Inc. operates as a diversified technology and manufacturing company worldwide. It operates through four segments: Aerospace; Home and Building Technologies; Performance Materials and Technologies; and Safety and Productivity Solutions. The Aerospace segment supplies products, software, and services for aircraft and vehicles that it sells to original equipment manufacturers and other customers in various markets, including air transport, regional, business and general aviation aircraft, airlines, aircraft operators, defense and space contractors, and automotive and truck manufacturers. The Home and Building Technologies segment provides products, software, solutions, and technologies that help homes owners, commercial building owners, and occupants. The Performance Materials and Technologies segment develops and manufactures advanced materials, process technologies, and automation solutions. The Safety and Productivity Solutions segment provides products, software, and connected solutions to customers that enhance productivity, workplace safety, and asset performance. Honeywell International Inc. was founded in 1920 and is headquartered in Morris Plains, New Jersey.
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