Critical Contrast: Holley (NYSE:HLLY) vs. Allison Transmission (NYSE:ALSN)

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

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allison Transmission	1	4	1	0	2.00
Holley	0	1	8	0	2.89

Allison Transmission presently has a consensus target price of $71.71, indicating a potential downside of 3.73%. Holley has a consensus target price of $7.75, indicating a potential upside of 93.75%. Given Holley’s stronger consensus rating and higher possible upside, analysts clearly believe Holley is more favorable than Allison Transmission.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allison Transmission	$3.04 billion	2.15	$673.00 million	$7.49	9.95
Holley	$659.70 million	0.72	$19.18 million	$0.17	23.53

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

Volatility and Risk

Allison Transmission has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Holley has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500.

Insider & Institutional Ownership

96.9% of Allison Transmission shares are owned by institutional investors. Comparatively, 39.7% of Holley shares are owned by institutional investors. 1.1% of Allison Transmission shares are owned by company insiders. Comparatively, 0.9% of Holley shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Allison Transmission	21.80%	58.05%	13.56%
Holley	2.91%	5.77%	2.04%

Summary

Allison Transmission beats Holley on 9 of the 14 factors compared between the two stocks.

About Allison Transmission

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells fully automatic transmissions for medium- and heavy-duty commercial vehicles and medium- and heavy-tactical U.S. defense vehicles, and electrified propulsion systems worldwide. It provides commercial-duty on-highway, off-highway and defense fully automatic transmissions, and electric hybrid and fully electric systems. The company offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. It provides its transmissions and electric propulsion solutions under the Allison Transmission brand name; and remanufactured transmissions under the ReTran brand name. The company also sells branded replacement parts, support equipment, aluminum die cast components, and other products necessary to service the installed base of vehicles utilizing its solutions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. It serves customers through an independent network of approximately 1,600 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 Holley

Holley Inc. operates as designer, manufacturer, and marketer of automotive aftermarket products for car and truck enthusiasts in the United States, Canada, Europe, and China. Its products span various automotive platforms and sells across multiple channels. The company's performance automotive products include carburetors, fuel pumps, fuel injection systems, nitrous oxide injection systems, superchargers, exhaust headers, mufflers, distributors, ignition components, engine tuners, automotive performance plumbing products; and exhaust products, as well as shifters, converters, transmission kits, transmissions, tuners, and automotive software. It also offers brakes and brake systems, vehicle restoration parts, helmets, head and neck restraints, seat belts, fire suits, and electronic control and monitoring systems. The company sells its products under the Holley, Holley EFI, MSD, Simpson, Powerteq, Accel, and Flowmaster through DTC, E-tailer, warehouse distributor, traditional retailer, and jobber/ installer channels. Holley Inc. was founded in 1903 and is headquartered in Bowling Green, Kentucky.