Allison Transmission (NYSE:ALSN) versus Gates Industrial (NYSE:GTES) Financial Survey

Gates Industrial (NYSE:GTES) and Allison Transmission (NYSE:ALSN) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, risk, analyst recommendations, dividends, institutional ownership and profitability.

Risk and Volatility

Gates Industrial has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Allison Transmission has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500.

Valuation & Earnings

This table compares Gates Industrial 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
Gates Industrial	$3.44 billion	1.86	$251.40 million	$1.44	17.73
Allison Transmission	$3.01 billion	3.56	$623.00 million	$6.96	18.73

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gates Industrial	10.37%	10.42%	5.46%
Allison Transmission	11.12%	42.33%	10.26%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gates Industrial	0	3	9	0	2.75
Allison Transmission	0	3	4	2	2.89

Gates Industrial currently has a consensus target price of $32.18, indicating a potential upside of 26.07%. Allison Transmission has a consensus target price of $135.62, indicating a potential upside of 4.06%. Given Gates Industrial’s higher probable upside, analysts plainly believe Gates Industrial is more favorable than Allison Transmission.

Insider and Institutional Ownership

98.5% of Gates Industrial shares are held by institutional investors. Comparatively, 96.9% of Allison Transmission shares are held by institutional investors. 2.8% of Gates Industrial shares are held by insiders. Comparatively, 1.1% of Allison Transmission shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Allison Transmission beats Gates Industrial on 8 of the 15 factors compared between the two stocks.

About Gates Industrial

Gates Industrial Corporation plc designs and manufactures engineered power-transmission and fluid-power solutions. Its products include belts and related components, as well as hoses and hydraulic systems used to transfer power and fluids in equipment and vehicles. The company serves customers across a range of industrial and mobility markets, including manufacturing, construction, agriculture, transportation and energy. Its products are used in both original-equipment applications and replacement markets.

About Allison Transmission

Allison Transmission designs and manufactures vehicle propulsion solutions, with a core business in fully automatic transmissions for commercial and military vehicles. Its products are used in applications such as buses, trucks, construction and refuse vehicles, emergency vehicles, and defense equipment. The company also develops electrified propulsion technologies, including hybrid systems and electric axles, for commercial vehicles. Allison serves customers in markets around the world. Founded in 1915, Allison’s transmission business was part of General Motors for decades before becoming independent in 2007.