Eaton vs Allison Transmission Which Is Superior?

Eaton Corporation and Allison Transmission are both leading companies in the manufacturing of transmission systems for vehicles. Eaton specializes in power management solutions, including vehicle transmissions, while Allison Transmission is known for its high-quality automatic transmissions for commercial and military vehicles. Investors interested in the automotive industry may consider comparing the stocks of Eaton and Allison to determine which company offers the best investment opportunities. Factors such as market performance, financial stability, and growth potential can all influence the decision-making process.

Eaton or Allison Transmission?

When comparing Eaton and Allison Transmission, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Eaton and Allison Transmission.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Eaton has a dividend yield of 1.06%, while Allison Transmission has a dividend yield of 0.86%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Eaton reports a 5-year dividend growth of 5.44% year and a payout ratio of 39.12%. On the other hand, Allison Transmission reports a 5-year dividend growth of 8.92% year and a payout ratio of 11.85%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Eaton P/E ratio at 37.52 and Allison Transmission's P/E ratio at 13.96. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Eaton P/B ratio is 7.40 while Allison Transmission's P/B ratio is 6.25.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Eaton has seen a 5-year revenue growth of 0.17%, while Allison Transmission's is 0.65%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Eaton's ROE at 19.66% and Allison Transmission's ROE at 51.13%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $355.89 for Eaton and $115.52 for Allison Transmission. Over the past year, Eaton's prices ranged from $231.84 to $379.99, with a yearly change of 63.90%. Allison Transmission's prices fluctuated between $55.19 and $122.53, with a yearly change of 122.01%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.