4 Undervalued Machinery Stocks for Friday, April 04

Why Focus on Undervalued Machinery Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

What Goes Into AAII’s Value Grade?

4 Undervalued Machinery Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Machinery industry for Friday, April 04, 2025. Let’s take a closer look at their individual scores to see how they measure up against each other and the Machinery industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

Value Grade:

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells fully automatic transmissions for medium- and heavy-duty commercial vehicles and medium- and heavy-tactical U.S. defense vehicles, and electrified propulsion systems worldwide. The company offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. It provides its transmissions and electric propulsion solutions under the Allison Transmission brand name; and remanufactured transmissions under the ReTran brand name. The company also sells branded replacement parts, support equipment, aluminum die cast components, and other products necessary to service the installed base of vehicles utilizing its solutions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. The company was formerly known as Clutch Holdings, Inc. Allison Transmission Holdings, Inc. was founded in 1915 and is headquartered in Indianapolis, Indiana.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Allison Transmission Holdings, Inc. has a Value Score of 61, which is considered to be undervalued.

When you look at Allison Transmission Holdings, Inc.’s price-to-sales ratio at 2.46 compared to the industry median at 1.30, this company has a higher price relative to revenue compared to its peers. This could make Allison Transmission Holdings, Inc.’s stock less attractive for value investors.

Allison Transmission Holdings, Inc.’s price-earnings ratio is 10.90 compared to the industry median at 20.40. This means it has a lower share price relative to earnings compared to its peers. This could make Allison Transmission Holdings, Inc. more attractive for value investors.

Now, let’s assess Allison Transmission Holdings, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 7.7, when compared to the industry median of 13.4, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Allison Transmission Holdings, Inc.’s shareholder yield is higher than its industry median ratio of 0.50%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Allison Transmission Holdings, Inc.’s price-to-book ratio is higher than its industry median ratio of 2.26. This could make Allison Transmission Holdings, Inc. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Allison Transmission Holdings, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Allison Transmission Holdings, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 24.15. This could make Allison Transmission Holdings, Inc. more attractive because the lower P/FCF ratio indicates that Allison Transmission Holdings, Inc. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company’s cash flow to share price value is generally improving or worsening.

China Yuchai International Limited’s Value Grade

Value Grade:

China Yuchai International Limited, through its subsidiaries, manufactures, assembles, and sells diesel and natural gas engines for trucks, buses and passenger vehicles, marine, industrial, construction, agriculture, and generator set applications in the People’s Republic of China and internationally. It operates through two segments, Yuchai and HLGE. The Yuchai segment manufactures on- and off-road powertrain solutions and applications. The HLGE is engaged in hospitality and property development activities. The company provides diesel engines comprising 4- and 6-cylinder diesel engines, high horsepower marine diesel engines, and power generator engines; natural gas engines, methanol combustion engines, diesel power generators, diesel engine parts, and remanufacturing services; as well as plug in hybrid engines, range extenders, power generation powertrains, hybrid powertrains, integrated electric drive axel powertrains, and fuel cell systems. It also offers maintenance and retrofitting services. It distributes its engines directly to auto original equipment manufacturers, agents, and retailers. The company was founded in 1951 and is based in Singapore.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

China Yuchai International Limited has a Value Score of 98, which is considered to be undervalued.

China Yuchai International Limited’s price-earnings ratio is 14.0 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes China Yuchai International Limited more attractive for value investors.

Value Grade:

Kennametal Inc. engages in development and application of tungsten carbides, ceramics, and super-hard materials and solutions for use in metal cutting and extreme wear applications to enable customers work against corrosion and high temperatures conditions worldwide. It operates through two segments, Metal Cutting and Infrastructure. The Metal Cutting segment offers standard and custom products, including milling, hole making, turning, threading and toolmaking systems, and services, as well as specialized wear components and metallurgical powders for manufacturers engaged in various industries, such as the manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframes, aero engines, trucks and automobiles, ships, and various types of industrial equipment; and energy-related components for the oil and gas industry, as well as power generation. The segment provides its products under the Kennametal, WIDIA, WIDIA Hanita, and WIDIA GTD brands through its direct sales force, a network of independent and national distributors, and integrated suppliers, as well as digital channels. The Infrastructure segment produces compacts, nozzles, frac seats, and custom components used in oil and gas, and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling, and road milling; tungsten carbide powders for the oil and gas, aerospace, and process industries; critical wear components, tungsten penetrators, and armor solutions for aerospace and defense; and ceramics used by the packaging industry for metallization of films and papers. This segment offers its products primarily under the Kennametal brand through direct sales force and distributors. The company was founded in 1938 and is based in Pittsburgh, Pennsylvania.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Kennametal Inc. has a Value Score of 72, which is considered to be undervalued.

Kennametal Inc.’s price-earnings ratio is 16.2 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Kennametal Inc. more attractive for value investors.

Kennametal Inc.’s price-to-book ratio is higher than its peers. This could make Kennametal Inc. less attractive for value investors when compared to the industry median at 2.26.

Value Grade:

The Manitowoc Company, Inc., together with its subsidiaries, provides engineered lifting solutions in the Americas, Europe, Africa, the Middle East, the Asia Pacific, and internationally. The company designs, manufactures, and distributes crawler-mounted lattice-boom cranes under the Manitowoc brand; a line of top-slewing and self-erecting tower cranes under the Potain brand; mobile hydraulic cranes comprising rough-terrain cranes, all-terrain cranes, truck-mounted cranes, telescopic crawler cranes, industrial cranes, and hydraulic boom trucks under the Grove, Shuttlelift, and National Crane brands. It also provides aftermarket services, such as sale of parts and accessories, field service work, routine maintenance services, technical support, erection and decommissioning services, crane and component remanufacturing, training, and telematics services. The company’s crane products are used in various applications, including energy production/distribution and utilities; petrochemical and industrial; infrastructure, such as road, bridge, and airport construction; and commercial and residential construction. It serves a range of customers, including dealers, rental companies, contractors, and government entities in the petrochemical, industrial, commercial construction, power and utilities, infrastructure, and residential construction end markets. The Manitowoc Company, Inc. was founded in 1902 and is headquartered in Milwaukee, Wisconsin.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

The Manitowoc Company, Inc. has a Value Score of 71, which is considered to be undervalued.

The Manitowoc Company, Inc.’s price-earnings ratio is 5.2 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes The Manitowoc Company, Inc. more attractive for value investors.

The Manitowoc Company, Inc.’s price-to-book ratio is higher than its peers. This could make The Manitowoc Company, Inc. less attractive for value investors when compared to the industry median at 2.26.

Choosing Which of the 4 Best Machinery Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Allison Transmission Holdings, Inc. stock has a Value Grade of B.
• China Yuchai International Limited stock has a Value Grade of A.
• Kennametal Inc. stock has a Value Grade of B.
• The Manitowoc Company, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 undervalued stocks in the Machinery industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

Additional Resources About Machinery Stocks

Want to learn more about Machinery stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

AAII Disclaimer