Allegion PLC (ALLE, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $138.25, Allegion PLC has witnessed a daily gain of 9.32%, marked against a three-month change of 4.74%. A thorough analysis, underlined by the GF Score, suggests that Allegion PLC is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 10/10
- Growth rank: 9/10
- GF Value rank: 7/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high GF Score of 95 out of 100, Allegion PLC signals the highest outperformance potential.
Understanding Allegion PLC's Business
Allegion PLC is a global security products company with a portfolio of leading brands such as Schlage, Von Duprin, and LCN. The Ireland-domiciled company was created via a spinoff transaction from Ingersoll-Rand in December 2013. In fiscal 2024, Allegion generated over 75% of sales in the United States. The company primarily competes with Sweden-based Assa Abloy, Switzerland-based Dormakaba, and US-based Fortune Brands Innovations. With a market cap of $11.9 billion and sales of $3.77 billion, Allegion PLC maintains an operating margin of 20.7%, showcasing its efficiency in operations.
Financial Strength Breakdown
According to the Financial Strength rating, Allegion PLC's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Allegion PLC stands impressively at 7.65, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.53, Allegion PLC's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Allegion PLC's impressive standing among its peers in generating profit. Allegion PLC's Operating Margin has increased by 3.65% over the past five years, as shown by the following data: 2020: 19.97; 2021: 18.49; 2022: 17.92; 2023: 19.61; 2024: 20.70. Furthermore, Allegion PLC's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2020: 43.34; 2021: 42.02; 2022: 40.42; 2023: 43.32; 2024: 44.23. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms Allegion PLC's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency. Allegion PLC's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Allegion PLC demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 10.8%, which outperforms better than 58.66% of 970 companies in the Business Services industry. Moreover, Allegion PLC has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 13.1, and the rate over the past five years is 12.5. This trend accentuates the company's continued capability to drive growth.
Conclusion
Allegion PLC's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. With a strong balance sheet, impressive profitability, and robust growth prospects, Allegion PLC is well-positioned to continue its trajectory of success. For investors seeking companies with strong GF Scores, GuruFocus Premium members can find more opportunities using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
