ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Allison Transmission Holdings's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2026 was 11.37%.
As of today (2026-06-24), Allison Transmission Holdings's WACC % is 9.77%. Allison Transmission Holdings's ROIC % is 13.49% (calculated using TTM income statement data).
Allison Transmission Holdings generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Allison Transmission Holdings's WACC % is 9.77%. Allison Transmission Holdings's ROIC % is 13.49% (calculated using TTM income statement data).
Allison Transmission Holdings generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Allison Transmission Holdings ROIC % Related Terms
Allison Transmission Holdings ROIC % Historical Data
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Auto Parts subindustry, Allison Transmission Holdings's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Allison Transmission Holdings ROIC % vs Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Allison Transmission Holdings's ROIC % distribution charts can be found below:
* The bar in red indicates where Allison Transmission Holdings's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Allison Transmission Holdings (ALSN) has a ROIC % of 11.37% as of Mar. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Allison Transmission Holdings and its competitors.
Is Allison Transmission Holdings' ROIC % too high?
Allison Transmission Holdings' current ROIC % is 11.37%. The Vehicles & Parts industry median ROIC % is 5.07. Allison Transmission Holdings' value of 11.37% is 124.3% above this industry median. Overall, Allison Transmission Holdings has a GF Score™ of 95/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does Allison Transmission Holdings' ROIC % compare to ALV and MBLY?
Allison Transmission Holdings' ROIC % of 11.37% can be compared against companies in the Vehicles & Parts industry. The industry median ROIC % is 5.07. Allison Transmission Holdings' value of 11.37% is 124.3% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Vehicles & Parts company?
The median ROIC % among Vehicles & Parts companies is 5.07, based on 1,316 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Allison Transmission Holdings's current ROIC % of 11.37% is 124.3% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Allison Transmission Holdings and its competitors. For the Vehicles & Parts industry, the median ROIC % is 5.07 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Allison Transmission Holdings's current ROIC % is 11.37%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Allison Transmission Holdings stock overvalued right now?
Based on GuruFocus' analysis, Allison Transmission Holdings (ALSN) is currently considered Fairly Valued. The stock's GF Value™ is $124.08, compared to a current price of $119.68 — trading 3.5% below its estimated fair value. The current ROIC % is 11.37% and 124.3% above the Vehicles & Parts industry median of 5.07. Allison Transmission Holdings' overall GF Score™ is 95/100 with 3 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Allison Transmission Holdings (ALSN), the current ROIC % is 11.37% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Allison Transmission Holdings (ALSN) Overvalued in 2026?
Based on GuruFocus' analysis, Allison Transmission Holdings stock appears to be undervalued.
The current stock price of $119.68 is trading 3.5% below its estimated GF Value™ of $124.08.
GuruFocus considers Allison Transmission Holdings to be Fairly Valued.
Key valuation signals for ALSN:
ROIC %: 11.37%
GF Value™: $124.08 vs. price of $119.68 (3.5% below fair value)
Industry Position: 124.3% above the Vehicles & Parts median
No single metric tells the full story. See the ALSN stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Allison Transmission Holdings Business Description
Allison Transmission is the largest manufacturer of fully automatic transmissions for medium- and heavy-duty commercial vehicles. Its automatic transmissions allow customers to achieve better fuel and operator efficiency than less expensive manual and automated manual transmissions. Allison serves several end markets, including on- and off-highway equipment and military vehicles. Its on-highway business commands approximately 60% global market share. The company's transmissions can be found in Class 4-8 trucks, buses, and a limited number of large passenger vehicles (heavy-duty pickup trucks and motorhomes). Allison also produces commercial hybrid propulsion systems and is developing fully electric powertrains.
95GF Score
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