Head-To-Head Review: Oshkosh (OSK) & Allison Transmission (ALSN)

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

Dividends

Oshkosh pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Allison Transmission pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Oshkosh pays out 22.6% of its earnings in the form of a dividend. Allison Transmission pays out 26.5% 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. Allison Transmission has increased its dividend for 3 consecutive years. Allison Transmission is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Oshkosh and Allison Transmission, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oshkosh 0 3 10 0 2.77
Allison Transmission 2 7 5 0 2.21

Oshkosh presently has a consensus price target of $94.58, suggesting a potential upside of 10.79%. Allison Transmission has a consensus price target of $43.20, suggesting a potential upside of 3.55%. Given Oshkosh’s stronger consensus rating and higher probable upside, research analysts clearly believe Oshkosh is more favorable than Allison Transmission.

Institutional & Insider Ownership

93.1% of Oshkosh shares are held by institutional investors. 1.6% of Oshkosh shares are held by company insiders. Comparatively, 7.9% 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 will outperform the market over the long term.

Volatility & Risk

Oshkosh has a beta of 1.53, suggesting that its stock price is 53% more volatile than the S&P 500. Comparatively, Allison Transmission has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Oshkosh 4.48% 16.64% 7.28%
Allison Transmission 16.34% 45.65% 8.34%

Valuation and Earnings

This table compares Oshkosh and Allison Transmission’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Oshkosh $6.83 billion 0.93 $285.60 million $4.24 20.13
Allison Transmission $1.84 billion 3.21 $214.90 million $2.26 18.46

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

Summary

Oshkosh beats Allison Transmission on 10 of the 17 factors compared between the two stocks.

Oshkosh Company Profile

Oshkosh Corporation is a manufacturer and marketer of access equipment, specialty vehicles and truck bodies for the primary markets of defense, concrete placement, refuse hauling, access equipment, and fire and emergency. The company’s brands include Oshkosh, JLG, Pierce, McNeilus, IMT, Frontline, Jerr-Dan, CON-E-CO and London. The Company operates through four segments: Access equipment, Defense, Fire & emergency and Commercial. The Access equipment segment provides aerial work platforms and telehandlers to position workers and materials at elevated heights. The Defense segment provides supply parts and services and wheeled vehicles. The Fire & Emergency segment manufactures and markets commercial and custom fire vehicles, simulators and emergency vehicles. The Commercial segment manufactures, markets and distributes concrete mixers, portable concrete batch plants, and vehicle and vehicle body components.

Allison Transmission Company Profile

Allison Transmission Holdings, Inc. and its subsidiaries design and manufacture commercial and defense fully-automatic transmissions. The Company manufactures fully-automatic transmissions for medium- and heavy-duty commercial vehicles, and medium-and heavy-tactical United States defense vehicles. The Company’s transmissions are used in a range of applications, including on-highway trucks (distribution, refuse, construction, fire and emergency), buses (primarily school, transit and hybrid-transit), motorhomes, off-highway vehicles and equipment (energy, mining and construction) and defense vehicles (wheeled and tracked). The Company’s transmissions are sold under the Allison Transmission brand name and remanufactured transmissions are sold under the ReTran brand name. The Company has developed over 100 different models that were used in more than 2,500 different vehicle configurations and were compatible with over 500 combinations of engines, as of December 31, 2016.

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