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Dublin, Ireland-based Allegion plc (ALLE), with a market cap of almost $12 billion, is a leading player in the security products and solutions sector. Specializing in both mechanical and electronic security systems, the company provides a wide range of products and services for residential, institutional, and commercial applications globally.
Shares of this security device maker have lagged behind the broader market, with a 23.3% gain over the past 52 weeks compared to the S&P 500 Index's ($SPX) 26.1% increase. In 2024, Allegion's stock rose 7.9%, trailing SPX’s 17.2% YTD gain.
However, zooming in further, despite ALLE outperforming the S&P 500 Industrial Sector SPDR’s (XLI) 20.3% gain over the past 52 weeks, it falls short of XLI's 13.3% YTD return.
Allegion stock has underperformed relative to the SPX due to slower-than-expected revenue growth, particularly in its residential sector, and its lagging stock performance despite robust growth in AI video surveillance and core physical security markets. However, the stock rose 3.9% following its Q2 earnings release on Jul. 24 due to the company's reported revenue of $965.6 million and non-GAAP EPS of $1.96, both surpassing analyst estimates. Additionally, the significant increase in free cash flow to $152.1 million, up from $23.9 million in the previous quarter, further boosted investor confidence.
For the current fiscal year, ending in December, analysts expect ALLE’s EPS to grow 4.3% year over year to $7.26. The company’s earnings surprise history is promising. It beat the consensus estimates in each of the last four quarters.
Among the eight analysts covering the stock, the consensus rating is a “Hold.” That’s based on one “Strong Buy” rating, five “Holds,” one “Moderate Sell,” and one “Strong Sell.”
On Aug. 27, Wells Fargo analyst Joe O’Dea maintained a “Buy” rating on Allegion and set a price target of $130. As of writing, ALLE is trading above the mean price target of $126. The Street-high price target of $146 implies a potential upside of only 6.9% from the current price.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
