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Allegion Unveils Latest Deadbolt, Enhances Product Portfolio

Zacks Equity Research

Allegion plc ALLE recently announced that its brand, Schlage, is launching the first-ever WiFi enabled deadbolt — the Schlage Encode Smart WiFi Deadbolt. Notably, the brand’s next generation smart lock, Schlage Encode features built-in WiFi connectivity that allows users secure remote access from anyplace. Currently, the latest smart lock is available for presale and will be put on show at the Key by Amazon CES booth.

The smart lock has easy installation capabilities with in-home WiFi connectivity, offering secure, remote access control to customers. As a matter of fact, the built-in technology of the smart lock removes the requirement of an additional hub. The latest smart lock offers several user-friendly features like the ability to control multiple guest access and the ability to monitor access via customizable notifications using a code.

Also, it provides customers the option to add Amazon.com, Inc.’s AMZN Cloud Cam to their Key Smart Lock Kit, allowing them to monitor entries as well as deliveries. Additionally, the Deadbolt's compatibility with Amazon Alexa enables customers to command the deadbolt and check status of their door.

Our Take

Although, Allegion’s focus on updating its products and developing new ones holds good, material cost inflation is escalating its aggregate costs of late. Rising cost, if unchecked, is likely to dent the company’s margins in the quarters ahead.

In the past month, shares of this Zacks Rank #4 (Sell) company have lost 8% compared with the industry’s decline of 4.4%.

Also, the company intends to expand its business in new overseas markets. However, this exposes it to economic, social and environmental risks. Moreover, Allegion’s businesses are subject to seasonality, depending on the product line. For instance, the company’s security product sales are typically higher in second and third quarters every year in the Northern Hemisphere as favorable weather are conducive for construction and do-it-yourself projects. However, any uncertainties or adversities during these quarters can be a huge drag on the company's sales.

Stocks to Consider

A couple of better-ranked stocks from the same space are DXP Enterprises, Inc. DXPE and Brady Corporation BRC. While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), Brady carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DXP Enterprises surpassed estimates thrice in the trailing four quarters, the average positive earnings surprise being 112.62%.

Brady exceeded estimates thrice in the trailing four quarters, the average positive earnings surprise being 7.04%.

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