Allison Transmission Joins S&P MidCap 400; Shares Up 1%

Allison Transmission (ALSN) will join the S&P MidCap 400 index, replacing Goodyear Tire & Rubber, S&P Dow Jones Indices said late Friday. The reshuffle follows Stellar Bancorp's acquisition of SouthStar Bancshares, which pushed the combined entity into the S&P SmallCap 600 and sent Goodyear, the index's outgoing component, down to the small-cap benchmark.

Shares of Allison Transmission rose just over 1% in after-hours trading on the news. The swap takes effect before the open on June 24. Index funds tracking the MidCap 400 will need to buy roughly 1.4 million Allison shares to match the new weighting, traders estimated.

The change is a structural tailwind for Allison, a manufacturer of commercial-vehicle transmissions based in Indianapolis. Inclusion in a broader-market index typically brings passive buying pressure and increased institutional coverage.

Goodyear, the tire maker that had been in the MidCap 400, slides into the SmallCap 600 alongside the combined Stellar-SouthStar entity. For Goodyear, the demotion means less passive fund demand and a narrower shareholder base.

Allison posted $3.1 billion in revenue last year, with earnings of $780 million. The company has a market capitalization of about $7.5 billion, fitting cleanly into the MidCap 400 range of roughly $5 billion to $20 billion.

S&P Dow Jones Indices gave no further comment beyond the standard eligibility notice. Allison Transmission said in a statement that it “looks forward to the increased visibility that comes with index membership.”

The inclusion arrives at a time when mid-cap stocks have outpaced large caps year-to-date, with the S&P MidCap 400 posting a 5% gain through Friday's close against the S&P 500's 2% rise.