Allegion (ALLE) AI Stock Analysis

• Market Cap: $12.27B
• Dividend Yield: 1.27%
• Average Volume (3M): 916.90K
• Price to Earnings (P/E): 21.2
• Beta (1Y): 0.66
• Revenue Growth: 6.87%
• EPS Growth: 13.53%
• Country: US
• Employees: 14,400
• Sector: Industrials
• Sector Strength: 72
• Industry: Security & Protection Services
• EPS (TTM): 1.94
• Shares Outstanding: 86,145,485
• 10 Day Avg. Volume: 856,213
• 30 Day Avg. Volume: 916,899
• PEG Ratio: 2.27
• Price to Book (P/B): 6.61
• Price to Sales (P/S): 3.36
• P/FCF Ratio: 19.95
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: 3.51
• Enterprise Value/Gross Profit: 7.78
• Enterprise Value/Ebitda: 14.30
• 1Y Price Target: $176.20
• Price Target Upside: 23.66% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5
• EPS Forecast (FY): 8.8
• Revenue Forecast (FY): $4.32B

• Rating: 72 Outperform
• Price Target: $158.00 ▲(10.88% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven primarily by solid financial performance (profitability, cash conversion, and improved leverage) and a generally positive earnings outlook with supportive 2026 guidance. This is tempered by a fairly rich valuation and technical indicators that suggest the stock may be overextended in the near term, plus some 2025 financial statement comparability/data-quality flags.

Positive Factors

Strong cash generation

Allegion converts earnings into cash at a high rate (OCF ~$784M and FCF ~$686M in 2025, FCF ~0.86–0.91x net income historically). Management targets ~85–95% cash conversion in 2026, providing durable internal funding for capex, dividends, and M&A without stressing liquidity.

Improved leverage and balance sheet

Meaningful deleveraging and a net-debt/EBITDA around 1.6x give the company durable flexibility. This supports disciplined capital deployment (dividend increases, M&A) and reduces refinancing risk, strengthening long-term ability to invest in growth or weather cyclical downturns.

Electronics & accretive M&A momentum

Electronics outpacing mechanical and targeted acquisitions expand higher-growth, software-enabled offerings. Accretive M&A broadened international scale and product set, supporting secular shift to electronic access and recurring services—structural drivers that can lift margins and market share over time.

Negative Factors

U.S. residential demand softness

Residential volumes are an important end-market and recent high-single-digit declines materially reduce revenue and door-opening share in the Americas. Management expects continued U.S. residential softness in 2026, creating a multi-quarter headwind to organic growth and margin leverage in that segment.

International organic weakness & M&A reliance

Reported international growth was mainly from acquisitions and FX rather than underlying demand, signaling fragile organic trends. Continued reliance on M&A to meet growth targets raises integration, working-capital, and execution risks that affect sustainable revenue and margin quality over the medium term.

Data comparability flags and balance-sheet nuances

Reporting anomalies and a large equity step-up in 2025 reduce confidence in year-to-year margin and leverage comparisons. While leverage metrics improved, the absolute debt level (~$2B) and reporting noise complicate assessment of persistent profitability and capital structure resilience absent further validation.

Allegion Business Overview & Revenue Model

Company Description

Allegion plc manufactures and sells mechanical and electronic security products and solutions worldwide. The company offers door closers, controls, and exit devices; locks, locksets, portable locks, and key systems and services; electronic security products and access control systems; time, attendance, and workforce productivity systems; doors and door systems; and other accessories. The company sells its products and solutions to end-users in commercial, institutional, and residential facilities, including education, healthcare, government, hospitality, commercial office, and single and multi-family residential markets under the CISA, Interflex, LCN, Schlage, SimonsVoss, and Von Duprin brands. It sells its products and solutions through distribution and retail channels, such as specialty distribution, e-commerce, and wholesalers, as well as through various retail channels comprising do-it-yourself home improvement centers, on-line and e-commerce platforms, and small specialty showroom outlets. Allegion plc was incorporated in 2013 and is headquartered in Dublin, Ireland.

How the Company Makes Money

Allegion makes money primarily by selling security and access-related products and solutions. Its core revenue stream is product sales of mechanical locks and door hardware (e.g., locksets, cylinders, door closers, exit devices) for commercial/institutional facilities and homes, complemented by electronics and software-enabled solutions such as electronic locks, access control devices, and related credentials and management capabilities. Revenue is generated through a mix of channels: sales to distributors and wholesalers who supply locksmiths, builders, contractors, and maintenance providers; sales through retail and e-commerce channels for certain residential products; and more direct, project-oriented selling for commercial/institutional deployments where Allegion products are specified in building designs or selected during retrofit upgrades. Earnings are supported by aftermarket and recurring-like demand driven by repair, replacement, and renovation cycles (e.g., rekeying, hardware upgrades, code compliance changes), as well as higher-value integrated electronic access solutions that can increase average selling prices and expand share of door openings within a facility. Allegion’s results are influenced by construction and renovation activity, institutional/commercial capital spending, channel inventory cycles, and its brand portfolio and distribution relationships; specific partnership details not provided here are null.

Allegion Financial Statement Overview

Summary

Overall fundamentals are solid: consistent revenue growth through 2021–2025 with strong profitability and cash conversion, plus improved leverage (debt-to-equity down to ~0.80x in 2025). Key offsets are data-quality/comparability concerns in 2025 income statement fields (gross profit/margins reported as 0) and a modest free-cash-flow decline in 2025 despite higher earnings.

Income Statement

Revenue has grown consistently from 2021–2025, with a sharp re-acceleration in 2025 (2025 revenue growth ~220% vs low-single-digit in 2024), and profitability is solid with net margins holding around ~15–17% over the period. EBITDA margins are healthy (~18%–24%) and generally stable. Key weakness: 2025 gross profit and several margin fields appear reported as 0, which reduces confidence in margin quality/trend for the latest year despite strong EBIT/EBITDA and net income.

Balance Sheet

Leverage has improved meaningfully: debt-to-equity declined from ~2.22x (2022) to ~0.80x (2025), supported by a large step-up in equity in 2025. Returns on equity are strong across the period (roughly ~26%–64%), signaling good profitability versus the capital base. Main risk: total debt remains sizable (~$2.0B in 2025), and the sharp equity increase in 2025 creates a year-to-year comparability flag that investors should validate.

Cash Flow

Cash generation is robust: operating cash flow rose to ~$784M in 2025 and free cash flow to ~$686M, with free cash flow consistently high versus net income (~0.86–0.91x across years). Operating cash flow has generally covered accounting earnings (around ~1.04x in 2025). Weakness: free cash flow growth turned negative in 2025 (-2.38%) after growth in prior years, suggesting reinvestment/working-capital or conversion softness in the latest period.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.07B	3.77B	3.65B	3.27B	2.87B
Gross Profit	1.84B	1.67B	1.58B	1.32B	1.20B
EBITDA	989.20M	916.90M	821.90M	688.30M	657.30M
Net Income	643.80M	597.50M	540.40M	458.00M	483.00M
Balance Sheet
Total Assets	5.22B	4.49B	4.31B	3.99B	3.05B
Cash, Cash Equivalents and Short-Term Investments	356.20M	503.80M	468.10M	288.00M	397.90M
Total Debt	2.28B	2.15B	2.02B	2.09B	1.44B
Total Liabilities	3.16B	2.99B	2.99B	3.05B	2.29B
Stockholders Equity	2.07B	1.50B	1.32B	941.80M	759.10M
Cash Flow
Free Cash Flow	685.70M	582.90M	516.40M	395.50M	443.20M
Operating Cash Flow	783.80M	675.00M	600.60M	459.50M	488.60M
Investing Cash Flow	-685.50M	-228.40M	-129.10M	-994.10M	-31.60M
Financing Cash Flow	-266.70M	-394.50M	-298.70M	437.00M	-529.30M

Allegion Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 142.49
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALLE, the sentiment is Negative. The current price of 142.49 is below the 20-day moving average (MA) of 151.25, below the 50-day MA of 160.84, and below the 200-day MA of 161.20, indicating a bearish trend. The MACD of -5.49 indicates Positive momentum. The RSI at 24.61 is Positive, neither overbought nor oversold. The STOCH value of 12.46 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALLE.

Allegion Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NSSC	78 Outperform	$1.45B	27.53	27.45%	1.29%	-2.28%	-9.94%
ALLE	72 Outperform	$12.27B	21.24	34.76%	1.27%	6.87%	13.53%
MSA	72 Outperform	$6.60B	22.52	21.82%	1.30%	3.31%	2.58%
ADT	70 Outperform	$5.34B	10.53	16.19%	2.73%	4.77%	-22.78%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BCO	62 Neutral	$4.02B	24.49	79.36%	0.85%	3.07%	48.57%
REZI	56 Neutral	$4.96B	9.68	-18.10%	―	15.45%	-488.24%