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Here's Why You Should Consider Investing in Allegion (ALLE)

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·3 min read
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Allegion plc ALLE currently boasts robust prospects on strong product portfolio, strength across its businesses, acquisitions, restructuring actions and shareholder-friendly policies.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The Zacks Rank #2 (Buy) company has a market capitalization of $11.2 billion. In the past year, it has gained 8.8% compared with the industry’s growth of 12.6%.

Let’s delve into the factors that make investment in the company a smart choice at the moment.

Business Strength: Allegion is poised to benefit from solid momentum in its residential security and non-residential security businesses, driven by strength across its construction and retail end markets, along with improvement in demand for discretionary projects. Also, strength across the company’s SimonsVoss, Interflex and Global Portable Security businesses is likely to act as tailwinds in the coming quarters. For the long run, its electronic products business is anticipated to drive its performance, supported by a solid product portfolio and a large customer base. For 2021 (results are awaited), it expects its revenues to grow 3-3.5% year over year on an organic basis.

Acquisition Benefits: The company intends to strengthen and expand its businesses through acquisitions. For instance, the Yonomi acquisition (January 2021) has been allowing Allegion to develop its smart-home solutions through major brands like Schlage. Also, the buyout of certain assets of Astrum Benelux B.V. and WorkforceIT B.V. (July 2021) has been enabling the company to strengthen its cloud and mobile solutions, along with its software-as-a-service capabilities.

Solid Cash Flow & Shareholder Rewards: Its ability to generate strong cash flows allows it to make acquisitions and reward shareholders. In the first three quarters of 2021, the company’s free cash flow totaled $327.7 million, reflecting an increase of 28% year over year. For 2021, it expects free cash flow to be $460-$480 million. Also, in the first three quarters of 2021, it paid out dividends worth $96.9 million and repurchased shares worth $212.7 million. Also, in February 2021, the company hiked its quarterly dividend rate by 13%.

Initiatives: The company’s restructuring actions, coupled with its focus on pricing and productivity initiatives, are likely to be beneficial in the quarters ahead. Allegion’s partnership with other companies has facilitated it in implementing its product innovation strategies.

Other Stocks to Consider

Some other top-ranked stocks from the Zacks Industrial Products sector are discussed below.

Berry Global Group, Inc. BERY presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Its earnings surprise in the last four quarters was 16.50%, on average.

In the past 30 days, Berry Global’s earnings estimates have increased 0.1% for fiscal 2022 (ending September 2022) and 0.4% for fiscal 2023 (ending September 2023). BERY’s shares have gained 37% in the past year.

Ituran Location and Control Ltd. ITRN presently has a Zacks Rank #2. Its earnings surprise in the last four quarters was 8.60%, on average.

In the past 30 days, Ituran’s earnings estimates have been stable for 2021 (results are awaited) and 2022. Its shares have gained 41.1% in the past year.

AZZ Inc. AZZ presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 16.90%, on average.

AZZ’s earnings estimates have increased 2.3% for fiscal 2022 (ending February 2022) and 3.7% for fiscal 2023 (ending February 2023) in the past 30 days. Its shares have gained 8.4% in the past year.


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AZZ Inc. (AZZ) : Free Stock Analysis Report

Berry Global Group, Inc. (BERY) : Free Stock Analysis Report

Allegion PLC (ALLE) : Free Stock Analysis Report

Ituran Location and Control Ltd. (ITRN) : Free Stock Analysis Report

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