Before we get into the details of ALSN, a small cap company that caught our attention is InCapta, Inc. (OTCPINK: INCT). INCT is a media holding company providing management services and investment to online game apps, celebrity apps, online radio, and on-line television. Today, the company announced that Qwote and Bahja Rodriquez have signed to have Play Celebrity Games produce and launch game apps for their fan base. In the press release, the company highlighted that they have signed two celebrities and launched five new apps for its followers providing a proof of principle for its business model.
KeyBanc Capital Markets analysts have updated their comment on Allison Transmission Holdings Inc (NYSE:ALSN), maintaining SECTOR WEIGHT rating on the stock. However, the analysts have lowered their earnings expectations for 2016 thanks to anticipated tough revenue condition in the year.
4Q2015 Earnings miss target
Allison Transmission Holdings Inc (NYSE:ALSN) reported 4Q2015 results in which EPS of $0.37 missed the consensus estimate of $0.57. Revenue of $478 million in the quarter topped the consensus estimate of $464.6 million, but fell short of revenue in a similar quarter a year ago by 12%.
Conservative guidance
Allison expects its topline to continue declining this year. As such, the management expects 2016 revenue to decline in the range of 6.5% to 9.5%. Additionally, 2016 EBITDA margin is expected to be in the range of 32.5% to 34%. That is below KeyBanc’s EBITDA margin estimate of 34.5 -35.5%.
Allison is looking for free cash flow in the band of $400 to $450 million in 2016. The cash flow estimate is in line with KeyBanc’s expectation.
According to KeyBanc, Allison Transmission Holdings Inc (NYSE:ALSN) has provided valid reasons for why it expects its revenue to shrink this year. For example, the company cites softness in demand for class 8 trucks in the North American market. Nevertheless, KeyBanc believes that Allison’s guidance is conservative because the company’s actual reporting could blow the estimates.
KeyBanc cuts estimates
Citing lower revenue outlook, KeyBanc has cut its various performance estimates for Allison Transmission Holdings Inc (NYSE:ALSN). For example, the firm has vacated its earlier 2016 EPS estimate of $1.38 and replaced it with $1.02. The consensus calls for 2016 EPS of $1.40.
As for EBITDA, KeyBanc’s new estimate for 2016 is $605 million, down from $698 million.
2017 estimates introduced
KeyBanc has introduced 2017 EPS estimate for Allison. For the year, the firm is looking for EPS of $1.12, which compares with the consensus of $1.53. EBITDA estimate for 2017 is quoted at $629 million against the consensus estimate of $704 million.
Shareholder return
Allison Transmission Holdings Inc (NYSE:ALSN) returns value to shareholders through a combination of dividends and buybacks. The company pays a quarterly dividend of $0.15 per share and it has $194 million left in the existing buyback authorization.
