PACCAR (NASDAQ: PCAR) and Allison Transmission Holdings (NASDAQ:ALSN) are both mid-cap auto/tires/trucks companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitabiliy, earnings and valuation.
Dividends
PACCAR pays an annual dividend of $1.00 per share and has a dividend yield of 1.5%. Allison Transmission Holdings does not pay a dividend. PACCAR pays out 26.7% of its earnings in the form of a dividend.
Valuation & Earnings
This table compares PACCAR and Allison Transmission Holdings’ gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| PACCAR | $16.97 billion | 1.41 | $2.36 billion | $3.74 | 18.23 |
| Allison Transmission Holdings | $1.88 billion | 3.04 | $662.40 million | N/A | N/A |
PACCAR has higher revenue and earnings than Allison Transmission Holdings.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for PACCAR and Allison Transmission Holdings, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| PACCAR | 1 | 8 | 9 | 0 | 2.44 |
| Allison Transmission Holdings | 1 | 5 | 4 | 1 | 2.45 |
PACCAR currently has a consensus target price of $71.87, suggesting a potential upside of 5.41%. Allison Transmission Holdings has a consensus target price of $38.29, suggesting a potential upside of 1.72%. Given PACCAR’s higher possible upside, analysts plainly believe PACCAR is more favorable than Allison Transmission Holdings.
Profitability
This table compares PACCAR and Allison Transmission Holdings’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| PACCAR | 7.77% | 18.61% | 6.23% |
| Allison Transmission Holdings | 16.63% | 36.64% | 7.93% |
Insider and Institutional Ownership
61.5% of PACCAR shares are held by institutional investors. 2.6% of PACCAR 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.
Summary
Allison Transmission Holdings beats PACCAR on 8 of the 15 factors compared between the two stocks.
PACCAR Company Profile
PACCAR Inc (PACCAR) is a technology company. The Company’s segments include Truck, Parts and Financial Services. The Truck segment includes the design, manufacture and distribution of light-, medium- and heavy-duty commercial trucks. The Company’s trucks are marketed under the Kenworth, Peterbilt and DAF nameplates. It also manufactures engines, primarily for use in the Company’s trucks, at its facilities in Columbus, Mississippi; Eindhoven, the Netherlands, and Ponta Grossa, Brazil. The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles. The Financial Services segment includes finance and leasing products and services provided to customers and dealers. Its Other business includes the manufacturing and marketing of industrial winches. The Company operates in Australia and Brazil and sells trucks and parts to customers in Asia, Africa, Middle East and South America.
Allison Transmission Holdings 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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