Allegion plc: Navigating Growth Challenges with Steady Demand in Security Solutions

Allegion plc (ALLE), valued at $12.3 billion, stands out as a leader in mechanical and electronic security products. Headquartered in Dublin, Ireland, the company meets the security needs of residential, institutional, and commercial markets globally through various distribution channels, including e-commerce and specialty stores.

Over the past year, Allegion’s shares have modestly outperformed the broader market, increasing by 33.7% compared to the S&P 500 Index ($SPX) which rose 32.1%. However, in 2024, ALLE’s share price has gained only 10.8%, lagging behind SPX’s impressive 26.2% YTD growth.

More specifically, Allegion has fallen behind the Industrial Select Sector SPDR Fund (XLI), which recorded a 36.3% return over the last year and a 26.4% YTD increase.

On Oct. 24, despite reporting stronger-than-expected Q3 results with an adjusted EPS of $2.16 and revenue of $967.1 million, Allegion’s stock fell by 3.7%. Concerns arose over disappointing growth in its residential segment impacted by high mortgage rates and soaring home prices. Additionally, lower operating income of $17.9 million from international operations and rising interest expenses further weighed on investor sentiment.

Looking ahead, analysts predict that ALLE’s EPS will grow 6.5% year-over-year to reach $7.41 by the end of the current fiscal year in December. Another positive note is the company’s history of meeting or exceeding earnings estimates in the last four quarters.

Among the eight analysts covering Allegion, the consensus rating stands at “Hold” due to two “Strong Buy” ratings, four “Holds,” one “Moderate Sell,” and one “Strong Sell.”

On Oct. 28, Barclays raised Allegion’s price target to $137 and maintained an “Underweight” rating, highlighting advancements in the company’s acquisition strategy and growth in electronic locks.

As of now, ALLE is trading below the average price target of $147, while the highest target of $165 suggests a potential upside of 17.5% based on current price levels.

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.