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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
ALLE — frequently asked questions
Is Allegion plc overvalued?
In our latest published analysis dated 2026-10-12, ALLE trades close to fair value. The price recorded at analysis is 150 USD versus our fair value of 157 USD; the high endpoint is presented separately as potential value of 183 USD. That implies roughly 4.3% upside to fair value at that date.
Our latest published report, analyzed 2026-10-12, gives ALLE a fair value of 157 USD and a potential value of 183 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Allegion plc's archetype; it is a dated research output, not a live price.
Should I buy ALLE now?
Our latest published rating for ALLE, analyzed 2026-10-12, is Hold. Allegion plc trades close to fair value at the analysis-date price of 150 USD versus fair value of 157 USD; potential value is 183 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for ALLE?
The dedicated bear-case section in our report analyzed 2026-10-12 documents Allegion plc's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is ALLE's rating?
Our latest published rating for ALLE, analyzed 2026-10-12, is Hold, with a published moat assessment of 8/10 (Narrow). It reflects our fair value of 157 USD, the potential value of 183 USD, and the price recorded at analysis (150 USD).
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§1 Resumen ejecutivoEN
Respuesta en 30 segundosHold
Precio frente a valor
Precio
$150.04
Valor razonable
$156.50
Valor potencial
$182.70
A fecha de
2026-10-12
Por qué puede funcionar
Secular transition from mechanical cylinders to networked electronic access control, mobile credentials, and specialized data center doors (via Krieger Specialty Products), lifting hardware dollar content per opening by 3x to 5x and driving consolidated operating margins toward 23%.
Qué cambiaría nuestra opinión
A prolonged freeze in commercial non-residential construction activity combined with unrecovered tariff-driven raw material inflation.
Allegion plc is rated Hold with an intrinsic Fair value of $156.50 per share and Potential value of $182.70, offering a 4.31% implied return relative to its share price of $150.04 as of October 12, 2026.4
Allegion operates a durable, high-return franchise centered on commercial door security hardware and electronic access systems. In FY2025, consolidated revenue reached $4,067.3 million with operating income of $859.5 million (21.13% ). Earnings power is driven by the Americas segment, which produced $896.5 million in operating income on $3,218.8 million in revenue (27.85% margin). Brand equity in Schlage, Von Duprin, and LCN, combined with deep architectural specification networks, embeds Allegion products into master building blueprints and municipal building codes, securing and recurring institutional replacement demand.
Growth is further supported by the secular transition toward electronic access control, mobile credentials, and smart hardware, which expands revenue per door opening by 3x to 5x relative to traditional mechanical locks. Tactical tuck-in acquisitions, such as Krieger Specialty Products, extend this specification moat into high-growth specialized verticals including hyperscale data centers. With capital expenditures representing just 2.41% of FY2025 revenue ($98.1 million), Allegion generated $685.7 million in free cash flow, converting 106.5% of net income and funding continuous share repurchases.5,6,7
However, consolidated returns are constrained by the International segment, which generated $848.5 million in revenue at an operating margin of 9.02% in FY2025. German macroeconomic weakness and ERP implementation production impacts have created volume headwinds. While management is executing a $10 million annual cost restructuring program, international dilution and commercial non-residential cyclical sensitivity balance the thesis. At $150.04, shares trade at a 4.1% discount to the fair value midpoint of $156.50, offering a modest 4.31% implied upside that warrants a Hold rating.4,5,8
Architectural Specification Lock-In and High Switching Costs
Allegion's flagship brands (Schlage, Von Duprin, LCN) are embedded directly into institutional building specifications, municipal building codes, and master blueprints, driving resilient recurring replacement demand and premium pricing power across North American non-residential facilities.5,8
Secular Tailwinds from Electronic Smart Lock Penetration
The ongoing conversion from mechanical hardware to networked electronic access control, mobile credentials, and cloud security expands total addressable dollar content per opening by 3x to 5x, driving high-single-digit organic growth in key verticals.5
With annual capex running at just 2.41% of revenue ($98.1M in FY2025), Allegion converts 85% to 95% of adjusted net income into available cash flow, returning cash to shareholders via repurchases and dividends while preserving balance sheet strength.5,7
Recomendación de la casa
Allegion represents a premier industrial compounder whose exemplary Americas specification moat and high free cash conversion are balanced at current prices by European macro headwinds and modest valuation upside, supporting a Hold rating.
Descripción general de la empresa
Allegion plc is a global security products and solutions provider specializing in architectural hardware, access control systems, and electronic security solutions for commercial, institutional, and residential facilities. Spun off from Ingersoll Rand in 2013, Allegion operates through two primary reporting segments: Allegion Americas and Allegion International.
The company's core brands hold leading market positions, including Schlage (commercial and residential locks), Von Duprin (exit devices), LCN (door closers), Steelcraft (hollow metal doors and frames), and specialized European access brands including CISA, Interflex, and SimonsVoss. In FY2025, Allegion generated $4,067.3 million in consolidated revenue and $859.5 million in operating income.
§2 Caso bajistaEN
A concurrent shock involving a commercial non-residential building freeze in the United States and deepened industrial recession in Germany severely impacts Allegion's financial performance. Under this stress scenario, consolidated operating margin compresses toward the 14.84% trough observed during the 2020 pandemic freeze. Unrecovered input cost inflation from tariffs on imported steel and hardware components, combined with negative volume leverage, reduces free cash flow generation by more than 25%. While Allegion's asset-light manufacturing structure and minimal maintenance capital expenditure requirements ($98.1 million capex in FY2025) shield the company from solvency risk, debt of $2,030.9 million would limit opportunistic capital return and depress valuation multiples toward lower peer levels.
Severe Non-Residential Construction Freeze and Tariff-Driven Margin Compression
In FY2020, Allegion operating margin contracted sharply to 14.84% during commercial construction freezes. A prolonged freeze in non-residential commercial builds combined with unrecovered tariff inflation would compress operating margin below 18.8% (300 bps below the 21.8% baseline target).5,7
FV impact
-2.8%
Operating margin 3 points lower throughout
Trigger
Within 12 months
Señales de alerta temprana a vigilar
Los cinco acontecimientos que debilitarían nuestra tesis de inversión.
A drop below 18.8% confirms severe margin compression from unrecovered raw material tariffs and commercial construction volume deleveraging, approaching the 14.84% FY2020 trough.
Actual:21.13% in FY2025 (22.1% reported and 24.2% adjusted in Q2 2026)
Allegion's competitive advantage is anchored in its commanding position across North American non-residential door openings. The Americas segment contributed $3,218.8 million, or 79.14% of total FY2025 revenue, and $896.5 million in operating income, delivering a 27.85% segment margin. This pricing strength stems from an institutional specification network that binds architects, commercial building owners, and general contractors to brands like Schlage, Von Duprin, and LCN. Spec writers routinely design complete door assemblies matching Allegion's proprietary SKUs, ensuring replacement cycles flow to Allegion distributors over decades-long building lifespans.
The secular transition from mechanical keys to connected electronic access control reinforces these switching costs. Electronic lock adoption in commercial facilities and multifamily residential properties increases hardware dollar content per door opening by 3x to 5x while introducing recurring credential and software revenue. Recent strategic acquisitions, including Krieger Specialty Products, expand this specification moat into high-growth, mission-critical infrastructure like hyperscale data center campuses.
Despite the strength of the Americas franchise, Allegion's overall economic moat is rated Narrow. The International division, which generated $848.5 million in FY2025 revenue, operates in fragmented European markets with lower institutional spec capture, producing an operating margin of 9.02%. This margin disparity dilutes consolidated return on capital, preventing a Wide moat classification.
Beneficio económico
Allegion generates returns on invested capital substantially above its cost of capital (WACC of 8.17%), anchored by Americas segment operating margins of 27.85% in FY2025. Consolidated economic profit is diluted by the International business, which produced an operating margin of 9.02% on $848.5 million in revenue in FY2025, supporting a Narrow rather than Wide moat rating.2,8
8/ 10
Narrow
Sources of advantage
01Switching Costs — Architectural specification writers embed Allegion brands like Schlage, Von Duprin, and LCN directly into master building blueprints and municipal building codes, creating massive switching costs and locking in replacement demand across institutional facilities.Wide
02Intangible Assets (Brands and Specification Proprietary Standards) — Grade 1 commercial mechanical and electronic hardware standards (Schlage, Von Duprin, LCN) hold entrenched institutional mindshare among facility managers, institutional buyers, and architects, securing pricing power.Wide
Amenazas conocidas al foso
Amenaza
Severidad
Cronograma
Mitigación
Prolonged European Non-Residential Building Stagnation and German Macro Deterioration
medium
12-24 months
Management is executing a $10 million annual cost reduction program reaching full run rate in Q4 2026, catching up on ERP implementation production disruptions, and implementing targeted European price increases.5
The highlighted cell is Fair value when every assumption sits at its base level ($156.50). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $693.1M after modeled reinvestment of $122.3M, with terminal value at 78.2% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
Accelerating electronic smart lock adoption in residential and institutional channels combined with faster European margin recovery confirms structural operational leverage.
En línea
Maintain Hold; Preserve existing exposure, monitor quarterly institutional backlogs, and track completed restructuring run rates.
Disparador: Adjusted EPS between $8.85 and $9.00 and organic revenue growth between 3.5% and 4.5%5
Performance aligns with expectations of steady Americas specification moat compounding offset by subdued European industrial demand.
Fallo
Downgrade the rating; Review downside risk boundaries, evaluate specification erosion signals, and prepare to scale back portfolio weighting.
Indicates unrecovered tariff inflation, severe commercial construction freeze, or deepening industrial contraction in core European markets.
Calidad de los beneficios
Allegion exhibits high earnings quality supported by a clean reconciliation between GAAP and adjusted metrics. In Q2 2026, GAAP diluted EPS was $2.15 compared to adjusted EPS of $2.40. Non-GAAP adjustments are standard and recurring, comprising $17.2 million of acquired intangible amortization ($0.20 per share) and $6.9 million of restructuring and integration costs ($0.05 per share). Cash conversion is robust, with FY2025 free cash flow of $685.7 million exceeding GAAP net income of $643.8 million (106.5% conversion). Available cash flow is guided to convert at 85% to 95% of adjusted net income for full-year 2026.5,6,7
Evolución de las estimaciones
Earnings estimate revisions have trended positively following the Q2 2026 earnings release, where management raised full-year adjusted EPSguidance from prior levels to $8.85-$9.00. Consensus FY2026 EPS estimates adjusted from $8.95 to $8.96 per share, while FY2027 EPS estimates moved from $9.77 to $9.78 per share. Consolidated revenue expectations were fine-tuned to $4,409.5 million for FY2026 and $4,631.4 million for FY2027.1,5
Cash generation is exceptionally strong, characterized by consistent conversion of accounting earnings into free cash flow. In FY2025, free cash flow was $685.7 million on GAAP net income of $643.8 million, representing a 106.5% conversion rate. For the first half of 2026, operating cash flow stood at $299.7 million and available cash flow at $260.8 million, down slightly by $14.6 million year-over-year due to working capital timing from strong late-quarter Americas revenue. Management guided full-year 2026 available cash flow conversion at 85% to 95% of adjusted net income, fully supporting our forecast model's 15% reinvestment rate assumption.5,6
Allegion's return on invested capital remains well in excess of its cost of capital, supported by strong return on equity (ROE modeled at 33.73%) and consolidated operating margins rising from 21.13% in FY2025 toward 21.96% in FY2026 and 22.81% by FY2030.
Economic returns comfortably clear the computed WACC of 8.17% (derived from cost of equity 8.74%, pre-tax cost of debt 5.76%, effective tax rate 14.51%, 85.17% equity weight, and 14.83% debt weight).
Americas segment drives company earnings power and offsets international dilution
Americas delivered $896.5 million in operating income on $3,218.8 million in in FY2025 (27.85% margin), rising to a 30.1% adjusted in Q2 2026. In contrast, International FY2025 operating profit was $76.5 million on $848.5 million in revenue (9.02% margin).
Ingresos más recientes4067,3 M US$CAGR de ingresos +6,9 %
Margen operativo21,1 %10 periodos fiscales
Flujo de caja libre más reciente685,7 M US$FY2025
Deuda neta1623,9 M US$FY2025
Desglose de la cuenta de resultadosCómo la escala del negocio se convierte en beneficio declarado.
StockMarketAgent.AI
Ingresos4067,3 M US$Coste de ventas−2229 M US$Beneficio bruto1838,3 M US$Gastos operativos−978,8 M US$Beneficio operativo859,5 M US$Partidas no operativas e impuestos−215,7 M US$Beneficio neto643,8 M US$
Datos del historial financiero
Ingresos
4.067.300.000 US$
Coste de ventas
2.229.000.000 US$
Beneficio bruto
1.838.300.000 US$
Gastos operativos
978.800.000 US$
Beneficio operativo
859.500.000 US$
Partidas no operativas e impuestos
-215.700.000 US$
Beneficio neto
643.800.000 US$
Resumen del balanceCómo se mantienen y financian los activos declarados en el período seleccionado.
StockMarketAgent.AI
Composición de activosFinanciado por
Activos totales5223,7 M US$Efectivo356,2 M US$Activos corrientes1391,8 M US$Pasivos totales3156,1 M US$Pasivos corrientes755,4 M US$Patrimonio neto2067,6 M US$
Datos del desglose del balance
Activos totales
5.223.700.000 US$
Efectivo
356.200.000 US$
Activos corrientes
1.391.800.000 US$
Pasivos totales
3.156.100.000 US$
Pasivos corrientes
755.400.000 US$
Patrimonio neto
2.067.600.000 US$
Puente de flujo de cajaCómo el flujo de caja operativo se convirtió en flujo de caja libre en FY2025.
StockMarketAgent.AI
Conciliación del flujo operativo
Beneficio neto643,8 M US$Depreciación y amortización+129,7 M US$Compensación basada en acciones+29,8 M US$Otros ajustes operativos−19,5 M US$Flujo de caja operativo783,8 M US$
Conciliación del efectivo inicial al final
Efectivo inicial503,8 M US$Flujo de caja operativo+783,8 M US$Flujo de inversión−685,5 M US$Flujo de financiación−266,7 M US$Efecto del tipo de cambio+20,8 M US$Efectivo final356,2 M US$
783,8 M US$ − 98,1 M US$Flujo de caja libre 685,7 M US$
Datos del puente de flujo de caja
Beneficio neto
643.800.000 US$
Entrada operativa
803.300.000 US$
Depreciación y amortización
129.700.000 US$
Compensación basada en acciones
29.800.000 US$
Flujo de caja operativo
783.800.000 US$
Salida operativa
19.500.000 US$
Efectivo disponible
1.308.400.000 US$
Efectivo inicial
503.800.000 US$
Efecto del tipo de cambio
20.800.000 US$
Salida de inversión
685.500.000 US$
Capex
98.100.000 US$
Otras actividades de inversión
587.400.000 US$
Salida de financiación
266.700.000 US$
Efectivo final
356.200.000 US$
Flujo de inversión
-685.500.000 US$
Flujo de financiación
-266.700.000 US$
Ingresos por segmento operativoProporción de los ingresos totales de 2025-12-31.
4067,3 M US$Ingresos totales
Ingresos por segmento operativoProporción
Alle_Allegion Americas3218,8 M US$79,1 %+6,9 % interanual
Allegion International848,5 M US$20,9 %+11,7 % interanual
Fuente: SEC EDGAR · Presentado 2026-02-17 · SEC EDGAR
Datos de composición de ingresos: Ingresos por segmento operativo
Ingresos por segmento operativo
Ingresos
Proporción
interanual
Alle_Allegion Americas
3218,8 M US$
79,1 %
6,9 %
Allegion International
848,5 M US$
20,9 %
11,7 %
Ingresos por regiónProporción de los ingresos totales de 2025-12-31.
4067,3 M US$Ingresos totales
Ingresos por regiónProporción
United States3049,8 M US$75 %+6,7 % interanual
Non Us1017,5 M US$25 %+11,4 % interanual
Fuente: SEC EDGAR · Presentado 2026-02-17 · SEC EDGAR
Datos de composición de ingresos: Ingresos por región
Ingresos por región
Ingresos
Proporción
interanual
United States
3049,8 M US$
75 %
6,7 %
Non Us
1017,5 M US$
25 %
11,4 %
Ingresos y beneficiosCómo la escala del negocio se convierte en beneficio declarado.
Efectivo y deudaLiquidez disponible frente al endeudamiento total.
Generación de efectivoFlujo de caja operativo frente al flujo de caja libre.
RentabilidadEvolución de los márgenes bruto, operativo y neto.
Datos financieros puntuales utilizados en el análisis del 2026-10-12.
Datos del historial financiero
Período
Ingresos
EBITDA
Beneficio neto
Flujo de caja operativo
Flujo de caja libre
Capex
Depreciación y amortización
Compensación basada en acciones
Recompras de acciones
Dividendos pagados
Emisión neta de deuda
Flujo de inversión
Flujo de financiación
Efectivo inicial
Efectivo final
Efectivo e inversiones
Deuda total
Margen operativo
ROIC
WACC
Diferencial ROIC−WACC
2016-12-31
2238 M US$
426,2 M US$
229,1 M US$
377,5 M US$
335 M US$
42,5 M US$
61,4 M US$
16,6 M US$
85,1 M US$
46 M US$
—
-64 M US$
-196 M US$
—
312,4 M US$
313,4 M US$
1463,8 M US$
19,4 %
—
5,8 %
—
2017-12-31
2408,2 M US$
568,3 M US$
273,3 M US$
347,2 M US$
297,9 M US$
49,3 M US$
61,6 M US$
16,2 M US$
60 M US$
60,9 M US$
—
-50,2 M US$
-150,9 M US$
312,4 M US$
466,2 M US$
466,4 M US$
1477,3 M US$
20,5 %
—
5,8 %
—
2018-12-31
2731,7 M US$
615,4 M US$
434,9 M US$
457,8 M US$
408,7 M US$
49,1 M US$
82,3 M US$
19,6 M US$
67,3 M US$
79,4 M US$
—
-443,8 M US$
-183,4 M US$
466,2 M US$
290,6 M US$
285,9 M US$
1444,8 M US$
19,2 %
—
6,2 %
—
2019-12-31
2854 M US$
614,2 M US$
401,8 M US$
488,2 M US$
422,6 M US$
65,6 M US$
78,1 M US$
20,4 M US$
226 M US$
100,6 M US$
—
-77,6 M US$
-342,2 M US$
290,6 M US$
358,7 M US$
355,3 M US$
1427,7 M US$
19,8 %
—
6,1 %
—
2020-12-31
2719,9 M US$
497,5 M US$
314,3 M US$
490,3 M US$
443,2 M US$
47,1 M US$
78 M US$
20,8 M US$
208,8 M US$
117,3 M US$
—
-56,7 M US$
-321,9 M US$
358,7 M US$
480,4 M US$
480,4 M US$
1429,6 M US$
14,8 %
—
5,3 %
—
2021-12-31
2867,4 M US$
657,3 M US$
483 M US$
488,6 M US$
443,2 M US$
45,4 M US$
79,2 M US$
23,4 M US$
412,8 M US$
129 M US$
—
-31,6 M US$
-529,3 M US$
480,4 M US$
397,9 M US$
397,9 M US$
1442,1 M US$
18,5 %
—
5,9 %
—
2022-12-31
3271,9 M US$
688,3 M US$
458 M US$
459,5 M US$
395,5 M US$
64 M US$
95,1 M US$
24,5 M US$
61 M US$
143,9 M US$
656,4 M US$
-994,1 M US$
437 M US$
397,9 M US$
288 M US$
288 M US$
2094,5 M US$
17,9 %
—
7,8 %
—
2023-12-31
3650,8 M US$
821,9 M US$
540,4 M US$
600,6 M US$
516,4 M US$
84,2 M US$
109 M US$
26,4 M US$
59,9 M US$
158,7 M US$
-81,6 M US$
-129,1 M US$
-298,7 M US$
288 M US$
468,1 M US$
468,1 M US$
2015 M US$
19,4 %
—
8,2 %
—
2024-12-31
3772,2 M US$
916,9 M US$
597,5 M US$
675 M US$
582,9 M US$
92,1 M US$
116,2 M US$
28,2 M US$
220 M US$
167 M US$
-13,3 M US$
-228,4 M US$
-394,5 M US$
468,1 M US$
503,8 M US$
503,8 M US$
1999,5 M US$
20,7 %
—
8,6 %
—
2025-12-31
4067,3 M US$
1002,6 M US$
643,8 M US$
783,8 M US$
685,7 M US$
98,1 M US$
129,7 M US$
29,8 M US$
80 M US$
175,3 M US$
-25,5 M US$
-685,5 M US$
-266,7 M US$
503,8 M US$
356,2 M US$
356,2 M US$
1980,1 M US$
21,1 %
—
7,6 %
—
§9 Comparación de valoración con pares
Valor razonableReport-date price
Allegion plcALLE
Precio / valor razonable
Valor razonable156,5 US$Report-date price150,04 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión68 / 100
Generac Holdings Inc.GNRC
Precio / valor razonable
Valor razonable192,98 US$Report-date price207,44 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión61 / 100
Huntington Ingalls Industries Inc.HII
Precio / valor razonable
Valor razonable377,71 US$Report-date price272,86 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión67 / 100
Allegion plcALLE
Precio / valor razonable
Valor razonable156,5 US$Report-date price150,04 US$
Allegion plc (ALLE) trades at 15.9x forward earnings against a peer median of 15.7x. Its EV/EBITDA of 14.0x compares with a peer median of 12.7x. The comparison uses 4 peers: Generac Holdings Inc., Huntington Ingalls Industries Inc., Equifax Inc. and J.B. Hunt Transport Services Inc., as of 2026-10-12.
§10 Industria y cicloEN
Fase del ciclo
Expansion
Capex was $98.1 million in FY2025 against revenue of $4,067.3 million (2.41% capex-to-revenue ratio), and 6M 2026 capital expenditures stood at $38.9 million. Reinvestment requirements remain modest, modeled at 15% of NOPAT. Capacity expansion remains disciplined, with capital allocated toward software integration and assembly efficiency rather than heavy facility expansion.7
Ciclo alcista
The commercial non-residential and institutional building cycle enters an expansive phase driven by educational facility safety upgrades, healthcare construction, and rapid adoption of connected electronic access solutions. High demand in data center construction and institutional facilities elevates specification volumes, while residential smart lock penetration expands addressable revenue per door opening by 3x to 5x.
Ciclo bajista
Elevated interest rates and tighter commercial financing trigger project cancellations and deferrals in non-residential construction. Prolonged European economic stagnation, particularly across German industrial centers, suppresses international volume demand and compresses pricing spreads.
Tendencias seculares
Tendencia
Impacto
Nota
Transition to Connected Electronic Access and Mobile Credentials
positive
Commercial and institutional facilities are migrating from mechanical cylinders to networked smart locks, boosting hardware dollar content per door opening by 3x to 5x and creating recurring software attach opportunities.
Institutional Life-Safety and Building Code Mandates
positive
Stringent egress, fire-code, and accessibility requirements (ADA and NFPA standards) heavily favor established Grade 1 hardware brands like Von Duprin and LCN, insulating institutional replacement cycles from speculative building volatility.
Posicionamiento
Allegion holds the leading market position in Americas commercial access hardware, supported by proprietary specification networks. This dominant position enables the company to harvest substantial cash flows from mature mechanical product lines while funding expansion in networked electronic security solutions and specialized institutional verticals.
§11 Gestión de posiciónEN
Tamaño de posición
2-3%
Under a Hold rating with an implied return of 4.31% to the fair value midpoint of $156.50, position sizing should match benchmark neutral exposure (2-3% of equity portfolio). The business demonstrates outstanding cash generation and specification defensibility, but prevailing valuation levels do not offer sufficient discount to justify an overweight stance.4
Riesgo
Risk management focuses on monitoring commercial architectural billing indices, non-residential spec activity, raw material tariff exposure, and European macro indicators. Total debt of $2,030.9 million is manageable against $685.7 million in annual free cash flow, but leverage must be monitored if international restructuring stalls.
Tramos de entrada
Nivel
Acción
Por qué
$150.04 (Current Market Level)
Hold / Maintain existing allocation
Shares trade within 4.1% of intrinsic fair value midpoint ($156.50), offering fair risk-adjusted compensation but inadequate margin of safety for fresh capital deployment.
$135.00 - $140.00
Opportunistic accumulation on pullback
A pullback into this range would expand implied upside above 12-16% relative to the $156.50 fair value midpoint, establishing an attractive margin of safety backed by Americas specification cash flows.
Tramos de salida
Nivel
Acción
$170.00 - $175.00
Trim position and harvest gains as shares approach consensus targets
Allegion commands an exceptional Grade 1 specification moat in the Americas with strong pricing power and 85%-95% cash flow conversion. However, with shares trading at $150.04 against a fair value midpoint of $156.50, current valuation fairly reflects business strengths.4,5
Growth and Electronic Conversion
Hold
Secular transition toward electronic locks and smart infrastructure provides high-single-digit organic growth potential in residential and institutional doors. Nonetheless, near-term European weakness limits upside.5
Value and Margin of Safety
Hold
A 4.1% discount to intrinsic value provides insufficient margin of safety for new capital allocation. Existing holders should maintain positions to capture ongoing cash compounding and share buybacks.4
§14 Recomendación finalEN
Acción
Mantener
Allegion plc is rated Hold with an intrinsic Fair value midpoint of $156.50 and Potential value of $182.70, representing 4.31% upside from its share price of $150.04 as of October 12, 2026.4
While the Americas architectural specification moat delivers robust 27.85% operating margins and strong free cash conversion, current valuation adequately reflects operating strengths against persistent European industrial softness.
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Sources
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Under the Bear trajectory, prolonged high interest rates and commercial real estate freezes depress non-residential project completions. Unrecovered tariff inflation on imported hardware components compresses operating margins toward 18.8%, while persistent German economic weakness prolongs International volume contraction.
Multiple De-Rating on Structural Growth Deceleration and Institutional Spec Erosion
Current forward P/E is 15.92x and base terminal multiple is modeled at 16.0x. If competitive encroachment in smart access accelerates or non-residential replacement cycles lengthen, Allegion exit multiple would de-rate by 20% to 12.8x, converging toward peer industrial valuation levels like HII at 12.60x.3,4
FV impact
-5%
Terminal multiple 20% lower
Trigger
Within 24 months
European Industrial Recession Spillover and US Commercial Capex Retrenchment
Consensus models 8.41% revenue growth in FY2026 and 5.03% in FY2027. However, International organic revenue declined 1.2% in Q2 2026 and 3.2% in 6M 2026, with Germany worsening. If European macro weakness spreads to domestic non-residential construction, 5-year revenue CAGR would drop by 500 bps to below 1.5%.1,5
FV impact
-5.8%
Revenue and EPS growth 5 points lower for five years
Margin contraction below 25.0% in the Americas signals institutional specification breakdown and aggressive pricing concessions under commercial non-residential slowdowns.
Actual:27.85% in FY2025 ($896.5M operating profit on $3,218.8M revenue)
Deceleration below 2.0% signals that secular electronic smart lock adoption has stalled and revenue per door opening has reverted to replacement GDP levels.
Actual:106.5% in FY2025 ($685.7M FCF on $643.8M net income) (85%-95% full-year 2026 guidance)
Alerta siBelow 75.0% of adjusted net income for a full fiscal year
Tariff-Driven Raw Material Inflation and Non-Residential Commercial Build Delays
medium
12-18 months
Disciplined Grade 1 price realization and ongoing productivity programs offset input cost inflation, maintaining positive price/cost spread in the Americas.5
Competitive Encroachment in Smart Access and Mobile Credential Platforms
low
3-5 years
Active portfolio expansion into specialized verticals including hyperscale data centers via Krieger Specialty Products and continuous integration of networked electronic hardware.5
Discounted forecast-period cash flows (36,23 US$) plus discounted terminal value (130 US$) minus signed per current share (19,10 US$) equals the 147 US$ lens value shown above. Negative net debt is , so subtracting it raises value.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
How this lens was calculated
Inputs used in this report
International operating margin recovers substantially with strong German industrial rebound
Under the Bull path, secular conversion to electronic access accelerates across both commercial institutional and residential markets, lifting organic revenue growth well above baseline rates. Americas specification win rates remain robust while specialized door solutions in hyperscale data centers expand rapidly. International restructuring exceeds expectations, restoring European operating margins substantially and driving strong EPS expansion.5
ActualGrew 6.9% in Q2 2026; full-year 2026 outlook raised to 3.5%-4.5%.
Por qué importa
Demonstrates underlying volume expansion and secular adoption of connected electronic smart locks above replacement demand.
Allegion maintains a disciplined capital allocation strategy focused on high-return reinvestment, steady dividend growth, programmatic share repurchases, and tuck-in M&A. In FY2025, operating cash flow reached $783.8 million with capital expenditures of only $98.1 million. In the first six months of 2026, the company deployed $160.6 million to share repurchases (including $120 million in Q2 2026 to retire ~0.9 million shares), paid $94.0 million in dividends, and invested $75.5 million in business acquisitions. Total debt stood at $2,030.9 million against $320.6 million in cash at June 30, 2026, maintaining a conservative leverage profile and preserving liquidity.
Low reinvestment requirements free over 85% of net income for distribution, enabling consistent share count reduction without balance sheet strain.
Guidance raise reflects domestic organic momentum and strategic tuck-in contributions
Q2 2026 reported revenue rose 12.7% (6.9% organic), prompting management to raise full-year 2026 reported revenue growthguidance to 7.5%-8.5% (3.5%-4.5% organic) and adjusted EPS to $8.85-$9.00.
Acquisitions like Krieger Specialty Products add approximately 400 bps of inorganic growth while core Americas electronic lock demand drives organic expansion.
Equifax Inc.EFX
Precio / valor razonable
Valor razonable160,83 US$Report-date price145,78 US$
Fecha de evaluación
Ventaja competitivaWide
Cuadro de mando de inversión61 / 100
J.B. Hunt Transport Services, Inc.JBHT
Precio / valor razonable
Valor razonable124,63 US$Report-date price223,75 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión64 / 100
Margen
ALLE
Allegion plc
$12.8B
15.9x
3.0x
14.0x
33.7%
—
GNRC
Generac Holdings Inc.
$12.9B
16.8x
2.9x
22.7x
9.5%
17.9%
HII
Huntington Ingalls Industries Inc.
$10.4B
12.6x
0.8x
11.4x
13.0%
7.1%
EFX
Equifax Inc.
$17.3B
14.7x
2.7x
11.7x
14.3%
17.3%
JBHT
J.B. Hunt Transport Services Inc.
$21.4B
23.1x
1.7x
13.7x
18.4%
7.4%
Hyperscale Data Center and Critical Infrastructure Expansion
positive
Surging demand for secure, acoustically sealed, and high-performance physical security doors across AI data center campuses expands specialized institutional hardware demand.
< 2.0% for full fiscal year
Re-assess electronic lock adoption assumptions and lower 5-year growth trajectory.
