Allison Transmission (ALSN) topped fourth-quarter earnings and revenue estimates Wednesday. The auto stock also gave an optimistic 2023 outlook, with global growth expectations. ALSN stock rose late Wednesday after closing in a buy zone.
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Fellow auto parts makerVisteon (VC) is set to report fourth-quarter results Thursday morning.
Auto stocks Allison Transmission and Visteon have averaged double-digit quarterly earnings growth over the last three quarters and both auto stocks are hovering slightly above buy points ahead of earnings.
Auto Stocks: Allison Transmission Earnings
Estimates: Wall Street predicted Allison Transmission earnings would rise 9% to $1.25 per share. Analysts expected revenue to advance 5% to $676 million. For full-year 2022, Allison Transmission earnings per share were expected to climb 21% to $5.27, with revenue increasing 14% to $2.73 billion.
Earnings: Allison Transmission reported Q4 sales increasing 11% to $718 million while EPS grew 32% to $1.52. Full-year revenue advanced 15% to $2.77 billion and earnings shot up 34% to $5.53 per share.
CEO David Graziosi said in a statement Wednesday that Allison Transmission had strong domestic and international demand.
The company reported a 15% sales increase in North America for its on-highway business segment. ALSN also reported a 28% sales increase in Europe, Middle East and Africa on the back of high demand for “vocational truck and wheeled defense” vehicles.
In China, Allison Transmission saw a 59% sales increase, despite a decline in production of more than 40% in the Chinese commercial truck and bus market, according to the company.
“As a result of the execution of our growth initiatives, we are guiding to another record revenue year for 2023 as we continue to increase our penetration and expand our addressable markets,” Graziosi said Wednesday.
Outlook: Allison Transmission expects 2023 sales of $2.825 billion-$2.925 billion. The company predicts adjusted EBITDA in the range of $965 million-$1.025 billion. ALSN executives also see adjusted free cash flow in the range of $480 million-$530 million. The company expects increased sales in 2023 driven by price hikes on “certain products.”
Auto Stocks: ALSN Stock
Allison Transmission stock rose 3.75% after hours Wednesday to 47.29. During regular market trade, ALSN shares edged up 0.11% to 45.58. The auto stock cleared a 45.43 cup-base buy point on Feb. 1 and has been trading around that entry since then, according to MarketSmith. The buy zone goes up to 47.70.
On a weekly chart, the cup base looks like a large handle to a consolidation going back to May 2021.
Previously, ALSN stock cleared an early entry on Jan. 24, as it rebounded above its 50-day line, cleared a short-term high and broke a down-sloping trendline.
The relative strength line has moved sideways for the past few months but is right at two-year highs. The RS line, the blue line in the charts provided, reflects a stock’s performance vs. the S&P 500 index.
Large Variety Of Markets
Indianapolis-based Allison Transmission designs and manufactures traditional and electrified vehicle propulsion solutions. Allison Transmission is also one of the largest global manufacturers of medium- and heavy-duty fully automatic transmissions for commercial and defense vehicles.
Allison Transmission products are used in a wide variety of applications, including on-highway trucks, buses, motor homes, construction and mining equipment as well as defense vehicles. The company has operations in around 150 countries with 1,400 independent distributor and dealer locations.
Last month, auto stock Allison Transmission announced it has partnered with Nikola (NKLA) to test its Class 8 battery-electric vehicle and hydrogen fuel cell electric vehicles.
In Q3, Allison Transmission’s earnings leapt 63%, the second straight quarter of accelerating growth. Sales rose 25%, the best gain in five quarters.
Auto stock Allison Transmission ranks second in the Auto/Truck-Original Equipment industry group. ALSN shares have a 97 Composite Rating out of 99. The stock has an 87 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating for the auto stock is 85.
Auto Stocks: Visteon Earnings
Estimates: Analysts predict fourth-quarter Visteon earnings per share fell 12% to $1.49. Wall Street forecasts revenue dropping 22% to $957 million. For the full year, analysts see Visteon earnings per share soaring 161% to $5.51. The Street expects sales to grow 32% to $3.65 billion.
Earnings: Check early Thursday.
Visteon stock fell 0.8% to 159.19 Wednesday amid higher-than-average volume, but rebounded intraday from the 21-day line. VC shares are in a consolidation and are in range of the current 152.20 buy point.
Investors previously could have used 147.17 as a handle entry, but VC stock showed messy action around that area in January.
The relative strength line for auto stock Visteon has been improving for 10 months and recently hit the highest point in more than four years.
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Specialties: AI, Self-Driving
The Michigan-based firm specializes in artificial intelligence and autonomous driving technology for automakers. Visteon provides automotive parts for myriad vehicle manufacturers, including Ford Motors (F) and General Motors (GM). Ford spun off Visteon in 2000. Its technology crosses a range of industries and applications, including AI, connected cars and cybersecurity.
The company has roughly 10,000 employees at more than 40 facilities in 17 countries and has new partnerships with Amazon (AMZN) and Qualcomm (QCOM).
Meanwhile, auto stock Visteon’s average earnings growth skyrocketed in the last three quarters, including a 777% increase in Q3. Additionally, Visteon sales growth has accelerated for the past four quarters, from -16% to 63%.
Visteon stock ranks No. 1 in the Auto/Truck-Original Equipment industry group. The auto stock has a 99 Composite Rating out of 99. VC stock has a 94 Relative Strength Rating. The EPS rating is 75.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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