Lagging Late-Cycle Exposure Can Help Allegion, But The Valuation Isn't Compelling To Me

Nov. 07, 2022 10:21 PM ETAllegion plc (ALLE)
Stephen Simpson profile picture
Stephen Simpson
18.39K Followers

Summary

  • Allegion posted very strong third quarter financials, as prior pricing actions helped drive strong revenue growth and better-than-expected margin leverage.
  • Allegion finally outperformed Assa Abloy in the Americas segment, but I'm concerned about the risk that construction markets in 2023 will be weaker than the market expects.
  • Mid-to-high single-digit long-term revenue and FCF growth, and near-term low-teens operating margins can more or less support the shares at these levels but Allegion doesn't seem significantly undervalued.
Close-up of fingers inserting a key into a door lock

SilentWolf/E+ via Getty Images

I wasn’t overly fond of Allegion (NYSE:ALLE) when I last wrote about this leading manufacturer of locks, door controls, and access systems, as I thought the shares were getting a bit too much credit for their end-market leverage. The shares have

This article was written by

Stephen Simpson profile picture
18.39K Followers
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.