Analyzing Tenneco (NYSE:TEN) & Allison Transmission (NYSE:ALSN)

Tenneco (NYSE:TEN) and Allison Transmission (NYSE:ALSN) are both auto/tires/trucks companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, profitability, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Tenneco and Allison Transmission, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tenneco 0 3 1 0 2.25
Allison Transmission 0 4 4 0 2.50

Tenneco presently has a consensus price target of $11.33, indicating a potential upside of 15.65%. Allison Transmission has a consensus price target of $51.29, indicating a potential upside of 10.43%. Given Tenneco’s higher possible upside, analysts clearly believe Tenneco is more favorable than Allison Transmission.

Institutional & Insider Ownership

84.5% of Tenneco shares are held by institutional investors. Comparatively, 94.5% of Allison Transmission shares are held by institutional investors. 3.3% of Tenneco shares are held by company insiders. Comparatively, 9.0% of Allison Transmission shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Tenneco and Allison Transmission’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tenneco -0.74% 18.48% 2.55%
Allison Transmission 23.61% 91.48% 14.76%

Risk & Volatility

Tenneco has a beta of 2.36, meaning that its share price is 136% more volatile than the S&P 500. Comparatively, Allison Transmission has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500.

Valuation & Earnings

This table compares Tenneco and Allison Transmission’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tenneco $11.76 billion 0.05 $55.00 million $6.28 1.56
Allison Transmission $2.71 billion 2.04 $639.00 million $4.78 9.72

Allison Transmission has lower revenue, but higher earnings than Tenneco. Tenneco is trading at a lower price-to-earnings ratio than Allison Transmission, indicating that it is currently the more affordable of the two stocks.

Summary

Allison Transmission beats Tenneco on 10 of the 14 factors compared between the two stocks.

Tenneco Company Profile

Tenneco Inc. designs, manufactures, and sells clean air, powertrain, and ride performance products and systems for light vehicle, commercial truck, off-highway, industrial, and aftermarket customers worldwide. The company offers clean air products and systems, including catalytic converters and diesel oxidation catalysts, diesel particulate filters, burner systems, lean nitrogen oxide (NOx) traps, hydrocarbon vaporizers and injectors, selective catalytic reduction (SCR) systems, SCR-coated diesel particulate filters systems, urea dosing systems, four-way catalysts, alternative NOx reduction technologies, mufflers and resonators, fabricated exhaust manifolds, pipes, hydroformed assemblies, elastomeric hangers and isolators, and aftertreatment control units. It also provides powertrain products and systems, such as pistons, piston rings, cylinder liners, valve seats and guides, bearings, spark plugs, valve train products, system protection products, and seals and gaskets; and aftermarket products, which include ride control parts and emission controls, as well as noise, vibration, and harshness (NVH) performance materials. In addition, the company offers ride performance products and systems comprising shock absorbers and struts, and NVH performance materials, as well as a product portfolio of electronically controlled ride performance technology; and motor parts, including chassis parts, braking products, and gaskets and seals, as well as filtration parts, lighting products, and ignition products. The company was formerly known as Tenneco Automotive Inc. and changed its name to Tenneco Inc. in 2005. Tenneco Inc. was founded in 1888 and is headquartered in Lake Forest, Illinois.

Allison Transmission Company Profile

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 12 transmission product lines 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. As of February 28, 2019, the company served 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.

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