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


  • 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

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Stephen Simpson profile picture
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.

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