Allegion (ALLE) AI Stock Analysis

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Allegion

(NYSE:ALLE)

Rating:78Outperform

Price Target:―

Allegion demonstrates strong financial performance and positive earnings guidance, driven by robust revenue growth and margin expansion. The technical indicators show upward momentum, although caution is advised due to overbought signals. Valuation appears fair, supported by a reasonable P/E ratio and dividend yield. The company's strategic focus on product innovation and market expansion further supports its growth potential.

Positive Factors

Earnings

Adjusted EPS reported at $1.86, which is higher than the consensus of $1.76.

Margins

Operating profit margins expanded to 22.1% due to favorable volume leverage and regional mix.

Organic Growth

Organic sales grew by 3.5%, led by strong performance in the Americas.

Negative Factors

End Markets

Analyst maintains an Underperform rating on ALLE given a negative view of the company’s end markets.

Guidance

Despite the positive results, the company reiterated its unchanged guidance for 2025, indicating possible lower volume expectations due to macroeconomic concerns.

International Performance

International operations experienced a decline in margins by 100bps.

Allegion (ALLE) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$12.16B

Dividend Yield1.38%

Average Volume (3M)920.34K

Price to Earnings (P/E)19.8

Beta (1Y)0.81

Revenue Growth5.48%

EPS Growth16.27%

CountryUS

Employees14,400

SectorIndustrials

Sector Strength92

IndustrySecurity & Protection Services

Share Statistics

EPS (TTM)1.86

Shares Outstanding86,049,290

10 Day Avg. Volume832,799

30 Day Avg. Volume920,341

Financial Highlights & Ratios

PEG Ratio4.35

Price to Book (P/B)7.62

Price to Sales (P/S)0.00

P/FCF Ratio19.02

Enterprise Value/Market Cap1.13

Enterprise Value/Revenue0.91

Enterprise Value/Gross Profit8.07

Enterprise Value/Ebitda3.79

Forecast

1Y Price Target

$137.00

Price Target Upside-5.21% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering6

Allegion Business Overview & Revenue Model

Company DescriptionAllegion 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 MoneyAllegion makes money through the sale of its security products and solutions across various sectors. Its revenue model is primarily product-based, with significant earnings from mechanical security products like locks and door hardware, as well as electronic security solutions including access control and biometric systems. The company also benefits from service contracts, which provide ongoing support and maintenance for their products. Strategic partnerships and acquisitions further enhance Allegion's market reach and technological capabilities, enabling it to maintain a competitive edge in the security industry.

Allegion Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: 14.29%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Positive

The earnings call presented a strong start to 2025 for Allegion, with significant revenue growth and margin expansion driven by the nonresidential business in The Americas and strategic product innovations. However, challenges remain in the residential market and international segment, alongside ongoing tariff-related uncertainties. The overall outlook remains positive, supported by resilient nonresidential markets and strategic acquisitions.

Q1-2025 Updates

Positive Updates

Strong Start to 2025 with Revenue Growth

Allegion reported Q1 2025 revenue of $941.9 million, an increase of 5.4% compared to 2024, with organic revenue growth of 4% driven by favorable price and volume, particularly in the nonresidential business in The Americas.

Margin Expansion and Increased Earnings Per Share

The adjusted operating margin increased by 150 basis points, and adjusted earnings per share rose by 20% to $1.86, indicating strong operational performance.

Cash Flow and Capital Allocation

Available cash flow for the quarter was $83.4 million, up nearly 250% versus last year. The company returned capital to shareholders, with $40 million in share repurchases and $44 million in dividends.

Product Innovation and Market Expansion

Launch of Schlage Sense Pro and Arrive Smart WiFi Deadbolt, enhancing Allegion's smart lock offerings. Three strategic acquisitions were closed, expanding Allegion's market reach in The Americas and Australia.

Positive Outlook for Nonresidential Market

Nonresidential markets, particularly institutional verticals, remain resilient. The company reiterated its 2025 outlook for adjusted earnings per share of $7.65 to $7.85.

Negative Updates

Residential Market Softness

The residential business declined mid-single digits in Q1, attributed to high mortgage rates and persistent market softness.

International Revenue Challenges

International revenues were down 0.3% on a reported basis, with a 3% currency headwind impacting the quarter. Adjusted operating margins for the International segment decreased by 20 basis points.

Tariff and Pricing Uncertainty

Ongoing tariff changes create uncertainty in pricing strategy, with a potential lag in price-cost alignment impacting Q2 margins.

Company Guidance

In the first quarter of 2025, Allegion reported strong financial performance, achieving a revenue of $941.9 million, reflecting a 5.4% increase compared to the previous year, with organic revenue growth of 4%. The company experienced a 150 basis point increase in adjusted operating margin and a 20% rise in adjusted earnings per share, reaching $1.86. Allegion maintained a robust balance sheet, with available cash flow rising to $83.4 million, up nearly 250% from the prior year. The Americas segment was a key driver, with a 6.8% increase in reported revenue and 4.9% organic growth. The company reaffirmed its full-year 2025 outlook, projecting an adjusted earnings per share between $7.65 and $7.85, despite tariff challenges anticipated to cost approximately $80 million. Allegion's strategic focus included investing in new product innovations, such as the Schlage Sense Pro and Arrive Smart WiFi Deadbolt, and completing three bolt-on acquisitions to bolster its portfolio. The company emphasized its commitment to returning capital to shareholders through dividends and share repurchases, with a dividend payout of $44 million and $40 million in share repurchases during the quarter.

Allegion Financial Statement Overview

Summary

Allegion’s financials reflect strong performance with consistent revenue growth, high profitability, and efficient cash flow management. The company's leverage is moderate, but it effectively uses its equity to generate returns. The financial health is robust, with potential for continued growth in the industry.

Income Statement

Very Positive

Allegion demonstrates strong revenue growth with a steady increase over the years, culminating in a healthy revenue growth rate of 3.73% in TTM. The company maintains robust profitability, evidenced by high gross and net profit margins of 58.07% and 16.28% respectively in TTM. EBITDA and EBIT margins are also strong, reflecting operational efficiency and effective cost management.

Balance Sheet

Positive

The balance sheet showcases a solid equity base with an improving equity ratio of 35.21% in TTM. Debt-to-equity ratio is moderately high at 1.24, suggesting a balanced use of debt and equity. Return on Equity stands impressively at 38.70% in TTM, indicating efficient use of shareholder funds to generate profits.

Cash Flow

Very Positive

Allegion's cash flow is robust, with a steady increase in free cash flow, marked by a 10.08% growth in TTM. The company has a strong operating cash flow to net income ratio of 1.17, indicating solid cash generation capabilities. The free cash flow to net income ratio of 1.03 further underscores the company's ability to convert profits into cash effectively.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.82B	3.77B	3.65B	3.27B	2.87B	2.72B
	Gross Profit
1.70B	1.67B	1.58B	1.32B	1.20B	1.18B
	EBIT
805.00M	780.70M	708.40M	586.40M	530.20M	403.50M
	EBITDA
945.10M	916.90M	821.90M	688.30M	657.30M	497.50M
	Net Income Common Stockholders
621.90M	597.50M	540.40M	458.00M	483.00M	314.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
494.50M	503.80M	468.10M	288.00M	397.90M	480.40M
	Total Assets
4.56B	4.49B	4.31B	3.99B	3.05B	3.07B
	Total Debt
2.00B	2.00B	2.02B	2.09B	1.44B	1.43B
	Net Debt
1.50B	1.50B	1.55B	1.81B	1.04B	949.20M
	Total Liabilities
2.96B	2.99B	2.99B	3.05B	2.29B	2.24B
	Stockholders Equity
1.61B	1.50B	1.32B	944.50M	762.40M	829.40M
Cash Flow		Free Cash Flow
641.70M	582.90M	516.40M	395.50M	443.20M	443.20M
	Operating Cash Flow
727.50M	675.00M	600.60M	459.50M	488.60M	490.30M
	Investing Cash Flow
-213.00M	-228.40M	-129.10M	-994.10M	-31.60M	-56.70M
	Financing Cash Flow
-406.71M	-394.50M	-298.70M	437.00M	-529.30M	-321.90M

Allegion Technical Analysis

Technical Analysis Sentiment

Positive

Last Price144.53

Price Trends

50DMA

133.45

Positive

100DMA

131.24

Positive

200DMA

135.07

Positive

Market Momentum

MACD

2.89

Positive

RSI

62.57

Neutral

STOCH

40.41

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALLE, the sentiment is Positive. The current price of 144.53 is above the 20-day moving average (MA) of 141.73, above the 50-day MA of 133.45, and above the 200-day MA of 135.07, indicating a bullish trend. The MACD of 2.89 indicates Positive momentum. The RSI at 62.57 is Neutral, neither overbought nor oversold. The STOCH value of 40.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALLE.

Allegion Risk Analysis

Allegion disclosed 35 risk factors in its most recent earnings report. Allegion reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 2 New Risks

Our business performance is impacted by the strength of the institutional, commercial and residential construction and remodeling markets and global macroeconomic factors. Q4, 2024

Our global operations subject us to political, economic and regulatory risks, including uncertainty related to the imposition of new or increased tariffs and the global trade environment more generally. Q4, 2024

Allegion Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NSSC	80 Outperform	$1.01B	23.08	27.48%	1.69%	-1.05%	-2.78%
MSA	79 Outperform	$6.38B	22.41	26.22%	1.29%	0.75%	7.20%
ALLE	78 Outperform	$12.16B	19.84	42.05%	1.38%	5.48%	16.27%
REZI	76 Outperform	$2.95B	50.32	2.58%	―	14.02%	-69.91%
ADT	72 Outperform	$6.88B	14.06	16.26%	2.68%	-5.44%	-16.05%
BCO	68 Neutral	$3.46B	22.10	54.50%	1.18%	1.97%	41.88%
Sector *	65 Neutral	$4.41B	12.06	5.22%	249.80%	4.09%	-12.16%

* Industrials Sector Average

Performance Comparison

ALLE

Allegion

144.53

25.90

21.83%

BCO

Brink's Company

84.39

-17.04

-16.80%

MSA

MSA Safety

162.40

-17.32

-9.64%

NSSC

Napco Security Technologies

28.34

-22.72

-44.50%

ADT

Adt

8.29

1.36

19.62%

REZI

Resideo Technologies

20.67

-0.81

-3.77%

Allegion Corporate Events

Executive/Board Changes

Allegion Expands Board with Gregg Sengstack Appointment

Positive

Dec 5, 2024

Allegion plc has expanded its Board of Directors by appointing Gregg C. Sengstack, a seasoned executive with over 30 years of experience, to enhance their strategic oversight. Sengstack, known for his expertise in international markets and finance, will contribute to the Audit and Finance, Compensation and Human Capital, and Corporate Governance and Nominating Committees. His extensive leadership background, including roles at Franklin Electric, is expected to bolster Allegion’s global security solutions focus.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.