ALLE

Industrials

Allegion

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Market Data

Financials

XBRL · SEC EDGAR

2012–2025(14yr)

Revenue

Net Income

Free CF

Metric	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$2.0B	$2.1B	$2.1B	$2.1B	$2.2B	$2.4B	$2.7B	$2.9B	$2.7B	$2.9B	$3.3B	$3.7B	$3.8B	$4.1B	+7.8%
Gross Profit	$825.6M	$861.5M	$853.7M	$869.1M	$985.3M	$1.1B	$1.2B	$1.3B	$1.2B	$1.2B	$1.3B	$1.6B	$1.7B	$1.8B	+10.2%
Gross Margin	40.8%	41.6%	40.3%	42.0%	44.0%	44.5%	43.0%	43.9%	43.3%	42.0%	40.4%	43.3%	44.2%	45.2%	+1.0pp
Operating Income	$371.3M	$240.8M	$326.3M	$358.6M	$425.5M	$488.2M	$525.8M	$565.1M	$403.5M	$530.2M	$586.4M	$708.4M	$780.7M	$859.5M	+10.1%
Operating Margin	18.4%	11.6%	15.4%	17.3%	19.0%	20.3%	19.2%	19.8%	14.8%	18.5%	17.9%	19.4%	20.7%	21.1%	+0.4pp
Net Income	$220.1M	$32.3M	$175.2M	$153.9M	$229.1M	$273.3M	$434.9M	$401.8M	$314.3M	$483.0M	$458.0M	$540.4M	$597.5M	$643.8M	+7.7%
Net Margin	10.9%	1.6%	8.3%	7.4%	10.2%	11.3%	15.9%	14.1%	11.6%	16.8%	14.0%	14.8%	15.8%	15.8%	-0.0pp
Free Cash Flow	$249.6M	$203.7M	$204.4M	$221.8M	$335.0M	$297.9M	$408.7M	$422.6M	$443.2M	$443.2M	$395.5M	$516.4M	$582.9M	$685.7M	+17.6%
FCF Margin	12.3%	9.8%	9.6%	10.7%	15.0%	12.4%	15.0%	14.8%	16.3%	15.5%	12.1%	14.1%	15.5%	16.9%	+1.4pp
EPS (Diluted)	$2.29	$0.34	$1.80	$1.59	$2.36	$2.85	$4.54	$4.26	$3.39	$5.34	$5.19	$6.12	$6.82	$7.44	+9.1%

Total Debt$2.0B

Cash & Equiv.$356.2M

Net Debt$1.6B

4 min read

1. THE BIG PICTURE

Allegion is successfully pivoting from selling standalone locks to managing entire digital "ecosystems" for building access. By embedding its technology into architectural specifications before construction begins, Allegion creates a structural demand for its high-margin electronic products that is harder for competitors to displace than simple hardware.

2. WHERE THE RISKS HIT HARDEST

Allegion’s "consultative expertise"—where specification writers work with architects to design custom systems—is directly threatened by "market cyclicality" (Risks). If high interest rates or work-from-home trends lead to the cancellation of commercial and institutional projects, the long-term specification work Allegion performs becomes moot, directly reducing future revenues (10-K Item 1A).

Furthermore, the "enterprise excellence" of its manufacturing operations is vulnerable to "cost inflation" (Risks). Because Allegion does not use financial derivatives to hedge prices for steel, zinc, or brass, its agile supply chain cannot fully protect margins when raw material prices spike; it must instead rely on annual price contracts that may lag behind market realities. Finally, its global manufacturing footprint faces geographic concentration risk, with 20-25% of its cost of goods sold originating in Mexico, making it highly sensitive to changes in U.S. trade policy or tariffs (Risks).

3. WHAT THE NUMBERS SAY TOGETHER

While Allegion reported a 9.3% increase in total revenue for Q4 2025, the "International" segment saw an organic decline of 2.3% (8-K). This suggests that recent growth is being heavily supported by acquisitions, such as the $389 million purchase of ELATEC, and a robust U.S. non-residential market, rather than broad global demand.

The TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth of 7.8% (XBRL) is notably higher than the 2026 organic growth guidance of 2% to 4% (8-K). This divergence reflects a cooling residential market—which declined high-single digits organically in the Americas—and the reality of lapping significant 2025 acquisitions. Short interest stands at 3.3% of the float (Supplemental Signals), indicating a mild but present skepticism regarding the sustainability of these growth rates or Allegion’s $2.0 billion debt load.

4. IS IT WORTH IT AT THIS PRICE?

At 15.7x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Allegion trades at a modest discount to the peer median of 18.4x (Peer Benchmarking). This discount appears unjustified by Allegion's fundamentals; Allegion leads its peer group in revenue growth (+7.8%) and maintains a strong net margin of 16.8%, second only to ITW.

At this multiple, the market is pricing in ~3.7% long-term growth (CAPM analysis). This is a conservative expectation that aligns closely with the lower end of management’s 2026 organic growth guidance (8-K). If growth were to slow to a GDP-pace of 2.5%, the justified multiple would fall to 13.3x (CAPM analysis). However, given that Allegion expects to convert 85% to 95% of adjusted net income into available cash flow in 2026, the current valuation provides a reasonable entry point for a business with superior growth relative to its peers.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if the Americas non-residential business—currently the primary engine of organic growth—stalls or turns negative due to a broader commercial real estate slowdown.
Constructive if the International segment returns to positive organic growth, proving that the recent 2.3% decline was a temporary volume fluctuation rather than a structural loss of market share.
Cautious if net debt-to-FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders leverage increases significantly beyond the current 2.6x level to fund further large-scale acquisitions (CAPM analysis).

6. BOTTOM LINE

Structural Advantage: A high-margin hardware-to-software integration strategy secured by "specification" lock-in with architects and a dominant portfolio of legacy brands like Schlage and Von Duprin. Bottom Line: Allegion is a high-quality industrial compounder trading at a modest discount that likely overstates the risks of its cyclical end-markets.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Market Cyclicality: Demand for Allegion’s products is tied to construction and remodeling markets, which are sensitive to interest rates, consumer confidence, and work-from-home trends. Weakness in these sectors can lead to project cancellations or delays, directly reducing revenues and cash flows.
Cost Inflation: Allegion faces rising prices for raw materials (steel, zinc, brass), energy, and labor. Because Allegion does not use financial derivatives to hedge commodity price volatility, it relies on annual price contracts and pricing actions, which may not fully offset cost increases.
Global Trade and Tariffs: Allegion sources 20-25% of its Cost of goods sold from Mexico and less than 5% from China. New or increased tariffs, or retaliatory trade restrictions, threaten to disrupt manufacturing and increase the cost of goods, with no assurance that mitigation strategies will be effective.
Currency Exchange Rates: Approximately 25% of 2025 Net revenues were derived outside the U.S. Fluctuations in the U.S. dollar against foreign currencies impact the reported value of assets, liabilities, and revenues in the Consolidated Financial Statements.
Indebtedness and Liquidity: Allegion held approximately $2.0 billion in debt as of December 31, 2025, including $190.6 million on its Revolving Facility. Rising interest rates or a failure to maintain financial covenants could restrict Allegion’s ability to fund operations, dividends, or share repurchases.

2. Company-Specific Risks

Goodwill and Intangible Assets: Allegion carries $1.9 billion in goodwill and $107.2 million in indefinite-lived intangible assets. Economic downturns or declines in operating results could trigger impairment charges that would materially impact results of operations.
Technological Convergence: The industry is shifting toward electronic and digital products. Allegion’s failure to successfully commercialize new IoT-connected devices or compete with non-traditional technology entrants could erode sales volumes and operating margins.
Acquisition Integration: Allegion’s growth strategy relies on acquisitions, which carry risks including the potential for overpaying for unprofitable businesses, the assumption of unforeseen liabilities, and the diversion of management resources.
Cybersecurity and Data Privacy: Allegion relies on complex IT systems for end-to-end operations. A successful cyberattack or failure to comply with evolving global data privacy regulations could result in significant remediation costs, regulatory fines, and reputational damage.

3. Regulatory/Legal Risks

Environmental Liability: Allegion is subject to retroactive, strict, and joint and several liability for the cleanup of hazardous substances at current and formerly owned sites. The EPA and state agencies have notified Allegion of required remedial actions at multiple locations.
Tax Structure and Reform: As an Irish-incorporated company, Allegion faces risks from the OECD’s global minimum tax (GMT) framework. Implementation of these rules in Ireland and other jurisdictions could materially increase Allegion’s effective tax rate.
Intellectual Property Litigation: Allegion competes in markets with extensive third-party intellectual property rights. Claims of infringement could force Allegion to cease marketing certain products or pay material costs for licenses.
Irish Corporate Law: As an Irish company, Allegion is governed by the Companies Act 2014. Shareholders may face more difficulty protecting their interests compared to U.S. corporations, and Allegion’s Articles of Association contain anti-takeover provisions that may deter acquisitions.

4. Financial Impact Map

Cyclical Market Demand → Revenues, Profitability, and Cash Flows → Weakness in construction markets causes project delays or cancellations. Cost Inflation → Margin Performance → Inability to pass through increased costs for raw materials, freight, and labor. Tariffs and Trade Policy → Cost of Goods Sold → Increased costs for components sourced from Mexico (20-25%) and China (<5%). Currency Fluctuations → Net Revenues and Consolidated Financial Statements → Translation of non-U.S. dollar denominated assets, liabilities, and expenses. Variable-Rate Indebtedness → Interest Expense → Exposure to rising interest rates on the $190.6 million outstanding under the Revolving Facility.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Feb 2026	—
10-K	Feb 2026	Dec 2025
10-Q	Oct 2025	Sep 2025
14A	Apr 2025	—