Buy or Sell Allegion Stock?
Allegion (ALLE) stock has fallen 18% during the past month, and is currently trading at $147.53. We believe there is a near-equal mix of good and bad in ALLE stock given its overall Moderate operating performance and financial condition. This is aligned with the stock’s Moderate valuation because of which we think it is Fairly Priced.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Moderate |
| What you get: | |
| Growth | Moderate |
| Profitability | Moderate |
| Financial Stability | Strong |
| Downturn Resilience | Very Weak |
| Operating Performance | Moderate |
| Stock Opinion | Fairly Priced |
Ask yourself – Is holding ALLE stock risky? Of course it is. High Quality Portfolio mitigates that risk.
Let’s get into details of each of the assessed factors but before that, for quick background: With $13 Bil in market cap, Allegion provides mechanical and electronic security products and solutions globally for commercial, institutional, and residential end-users.
[1] Valuation Looks Moderate
| ALLE | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 3.1 | 3.2 |
| Price-to-Earnings Ratio | 19.7 | 24.3 |
| Price-to-Free Cash Flow Ratio | 18.5 | 20.4 |
This table highlights how ALLE is valued vs broader market. For more details see: ALLE Valuation Ratios
[2] Growth Is Moderate
- Allegion has seen its top line grow at an average rate of 7.6% over the last 3 years
- Its revenues have grown 7.8% from $3.8 Bil to $4.1 Bil in the last 12 months
- Also, its quarterly revenues grew 9.3% to $1.0 Bil in the most recent quarter from $946 Mil a year ago.
| ALLE | S&P 500 | |
|---|---|---|
| 3-Year Average | 7.6% | 5.7% |
| Latest Twelve Months* | 7.8% | 6.6% |
| Most Recent Quarter (YoY)* | 9.3% | 7.2% |
This table highlights how ALLE is growing vs broader market. For more details see: ALLE Revenue Comparison
[3] Profitability Appears Moderate
- ALLE last 12 month operating income was $860 Mil representing operating margin of 21.1%
- With cash flow margin of 19.3%, it generated nearly $784 Mil in operating cash flow over this period
- For the same period, ALLE generated nearly $644 Mil in net income, suggesting net margin of about 15.8%
| ALLE | S&P 500 | |
|---|---|---|
| Current Operating Margin | 21.1% | 18.7% |
| Current OCF Margin | 19.3% | 20.9% |
| Current Net Income Margin | 15.8% | 12.8% |
This table highlights how ALLE profitability vs broader market. For more details see: ALLE Operating Income Comparison
[4] Financial Stability Looks Strong
- ALLE Debt was $2.0 Bil at the end of the most recent quarter, while its current Market Cap is $13 Bil. This implies Debt-to-Equity Ratio of 15.6%
- ALLE Cash (including cash equivalents) makes up $356 Mil of $5.2 Bil in total Assets. This yields a Cash-to-Assets Ratio of 6.8%
| ALLE | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 15.6% | 21.2% |
| Current Cash-to-Assets Ratio | 6.8% | 7.3% |
[5] Downturn Resilience Is Very Weak
ALLE has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- ALLE stock fell 39.9% from a high of $148.13 on 3 September 2021 to $88.99 on 27 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 14 October 2024
- Since then, the stock increased to a high of $179.77 on 8 February 2026 , and currently trades at $147.53
| ALLE | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -39.9% | -25.4% |
| Time to Full Recovery | 748 days | 464 days |
2020 Covid Pandemic
- ALLE stock fell 43.4% from a high of $138.90 on 14 February 2020 to $78.60 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 6 May 2021
| ALLE | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -43.4% | -33.9% |
| Time to Full Recovery | 409 days | 148 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read ALLE Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.