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Allegion PLC ALLE Stock Quote

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Morningstar‘s Stock Analysis ALLE

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Is it the right time to buy or sell?

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Wide-Moat Allegion's Third-Quarter Results Feature Strong Pricing Power and Margin Expansion

Analyst Note

| Brian Bernard, CFA, CPA |

We’ve raised our fair value estimate for Allegion by 1% to $133 per share following the firm’s third-quarter earnings release, primarily due to the time value of money. It was a strong quarter for Allegion as the wide-moat firm delivered 27% sales growth (19% organic) and 100 basis points of adjusted operating margin expansion (to 21%). Allegion’s price/cost woes, which had been an uncharacteristic issue last year and earlier this year, seem to be behind the firm as it realized significant pricing power during the quarter (13% sales growth from price). Allegion’s recent acquisition of Access Technologies, which is margin-dilutive, clouded the substantial margin expansion in the core Americas business. Indeed, excluding AT, the segment’s adjusted operating margin expanded 300 basis points to 28.5% (26% including AT). While AT has a structurally lower operating margin than Allegion’s Americas business, we think the acquisition makes sense strategically, and we thought Allegion paid a fair price (see our April 22 analyst note for our initial thoughts on the acquisition).

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Key Statistics ALLE

Company Profile ALLE

Business Description

Allegion is a global security products company with a portfolio of leading brands, such as Schlage, von Duprin, and LCN. The Ireland-domiciled company was created via a spinoff transaction from Ingersoll-Rand in December 2013. In fiscal 2021, Allegion generated 68% of sales in the United States. The company mainly competes with Sweden-based Assa Abloy AB and Switzerland-based Dormakaba.

Harcourt Road, Iveagh Court, Block D
Dublin 2, D02 VH94, Ireland
T +353 12546200
Industry Security & Protection Services
Most Recent Earnings Sep 30, 2022
Fiscal Year End Dec 31, 2022
Employees 11,000