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Here's Why You Should Add Allegion Stock to Your Portfolio
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The U.S. housing market is gradually recovering. Steady job and wage growth, a recovering economy, moderating home price gains, historically low interest/mortgage rates, rising rentals and rapidly increasing household formation, all point at continually strong demand in 2017.
Apart from major homebuilders, we believe that if there is one stock that can help you get an upper hand right now, then it is Allegion plc (ALLE - Free Report) . The company is a leading global provider of security products and solutions for business and domestic purposes. The company boasts an extensive portfolio of mechanical and electronic security products and comprises a diverse range of market-leading brands, including CISA, Interflex, aptiQ, LCN, Schlage and Von Duprin.
Stock Price Movement: Allegion’s shares have increased 25% year to date, outperforming the Zacks categorized Protection-Safety Equipment & Services industry’s gain of just 7.7%. That said, we have noticed that Allegion has also outperformed the industry in four-week time frame. The company’s acquisitions, divestitures, focus on innovation and solid footprints in emerging markets are encouraging. Further, a gradually recovering U.S. housing market bodes well and should drive the stock’s performance.
The stock boasts a solid trailing twelve-month return on equity or ROE of 234.8% compared with the industry average of just 11.5%.
Earnings & Revenue Growth: Possibly, nothing is more important than earnings growth, as increasing profit levels are often an indication of strong prospects (and stock price gains) ahead for the company in question.
On this front, Allegion has put up a historical (3–5 year) EPS growth rate of 8.2%. Moreover, the stock also has a long-term (3-5 years) expected EPS growth rate of 13.7%, slightly higher than the Zacks categorized Protection-Safety Equipment & Services industry average of 13%.
Meanwhile, the company’s sales are also expected to increase 6.5% in the current fiscal year compared with the industry average of 17.3% decline.
Benefitting from Acquisition: Acquisitions is an important part of Allegion’s growth strategy. The security products industry is highly fragmented, particularly in the developing markets, and involves the use of emerging technology products that employ newer technologies. This creates numerous opportunities to broaden the product portfolio as well as geographic footprint and enhance the position in strategic market segments through buyouts. During the first quarter of 2017 quarter, acquisitions contributed to a growth of 2%.
In Jan 2017, Allegion acquired McKenzie-based Republic Doors & Frames, Inc. through one of its subsidiaries. Republic Doors & Frames manufactures hollow metal doors and frames which complement Allegion’s Steelcraft brand and core business in the Americas. Management at Allegion believes that the addition of Republic Doors & Frames will expand its product line, improve operating efficiency and expand its distribution footprint.
Focus on Innovation: Allegion continuously updates its products and develops new ones to keep up with the changing market sentiment toward electronic security products and solutions. Last month, Allegion, through one of its subsidiaries, made an equity investment in Yonomi – a leading mobile application and cloud platform provider for connected living. Through the alliance, Allegion will have access to Yonomi’s Thin Cloud Infrastructure and cloud computing expertise.
The latest pact is consistent with Allegion’s strategy to drive growth and create shareholder value by investing in new technologies. The company’s unwavering focus on innovation and investments in new product development helps it in boosting the vitality index (an overall measure of innovativeness). Vitality index increased from single digits in 2014 to high teens in 2016.
Estimate Revisions: Allegion exceeded earnings expectations in two of the last four quarters, with an average beat of 2.01% in the trailing four quarters.
In the last 60 days, the Zacks Consensus Estimate for Allegion moved north by 2 cents to $3.68 per share for 2017 and 2 cents to $4.09 per share. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the stock’s Zacks Rank #2.
Other Stocks to Consider
You can consider a few other favorably ranked stocks in the same space.
G4S plc (GFSZY - Free Report) is a Zack Rank #2 company. Its earnings are expected to grow 12.4% this year.
MSA Safety Incorporated (MSA - Free Report) also carries a Zacks Rank #2. Its earnings have beaten estimates in three of the trailing four quarters, delivering an average positive surprise of 7.77%.
Net 1 UEPS Technologies, Inc. is another Zacks Rank #2 company whose earnings have surpassed estimates in all of the trailing four quarters with an average positive surprise of 16.62%.
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Here's Why You Should Add Allegion Stock to Your Portfolio
The U.S. housing market is gradually recovering. Steady job and wage growth, a recovering economy, moderating home price gains, historically low interest/mortgage rates, rising rentals and rapidly increasing household formation, all point at continually strong demand in 2017.
Apart from major homebuilders, we believe that if there is one stock that can help you get an upper hand right now, then it is Allegion plc (ALLE - Free Report) . The company is a leading global provider of security products and solutions for business and domestic purposes. The company boasts an extensive portfolio of mechanical and electronic security products and comprises a diverse range of market-leading brands, including CISA, Interflex, aptiQ, LCN, Schlage and Von Duprin.
This Zacks Rank #2 (Buy) company has good prospects and should make value addition to your portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Why is Allegion a Solid Pick?
Stock Price Movement: Allegion’s shares have increased 25% year to date, outperforming the Zacks categorized Protection-Safety Equipment & Services industry’s gain of just 7.7%. That said, we have noticed that Allegion has also outperformed the industry in four-week time frame. The company’s acquisitions, divestitures, focus on innovation and solid footprints in emerging markets are encouraging. Further, a gradually recovering U.S. housing market bodes well and should drive the stock’s performance.
The stock boasts a solid trailing twelve-month return on equity or ROE of 234.8% compared with the industry average of just 11.5%.
Earnings & Revenue Growth: Possibly, nothing is more important than earnings growth, as increasing profit levels are often an indication of strong prospects (and stock price gains) ahead for the company in question.
On this front, Allegion has put up a historical (3–5 year) EPS growth rate of 8.2%. Moreover, the stock also has a long-term (3-5 years) expected EPS growth rate of 13.7%, slightly higher than the Zacks categorized Protection-Safety Equipment & Services industry average of 13%.
Meanwhile, the company’s sales are also expected to increase 6.5% in the current fiscal year compared with the industry average of 17.3% decline.
Benefitting from Acquisition: Acquisitions is an important part of Allegion’s growth strategy. The security products industry is highly fragmented, particularly in the developing markets, and involves the use of emerging technology products that employ newer technologies. This creates numerous opportunities to broaden the product portfolio as well as geographic footprint and enhance the position in strategic market segments through buyouts. During the first quarter of 2017 quarter, acquisitions contributed to a growth of 2%.
In Jan 2017, Allegion acquired McKenzie-based Republic Doors & Frames, Inc. through one of its subsidiaries. Republic Doors & Frames manufactures hollow metal doors and frames which complement Allegion’s Steelcraft brand and core business in the Americas. Management at Allegion believes that the addition of Republic Doors & Frames will expand its product line, improve operating efficiency and expand its distribution footprint.
Focus on Innovation: Allegion continuously updates its products and develops new ones to keep up with the changing market sentiment toward electronic security products and solutions. Last month, Allegion, through one of its subsidiaries, made an equity investment in Yonomi – a leading mobile application and cloud platform provider for connected living. Through the alliance, Allegion will have access to Yonomi’s Thin Cloud Infrastructure and cloud computing expertise.
The latest pact is consistent with Allegion’s strategy to drive growth and create shareholder value by investing in new technologies. The company’s unwavering focus on innovation and investments in new product development helps it in boosting the vitality index (an overall measure of innovativeness). Vitality index increased from single digits in 2014 to high teens in 2016.
Estimate Revisions: Allegion exceeded earnings expectations in two of the last four quarters, with an average beat of 2.01% in the trailing four quarters.
In the last 60 days, the Zacks Consensus Estimate for Allegion moved north by 2 cents to $3.68 per share for 2017 and 2 cents to $4.09 per share. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the stock’s Zacks Rank #2.
Other Stocks to Consider
You can consider a few other favorably ranked stocks in the same space.
G4S plc (GFSZY - Free Report) is a Zack Rank #2 company. Its earnings are expected to grow 12.4% this year.
MSA Safety Incorporated (MSA - Free Report) also carries a Zacks Rank #2. Its earnings have beaten estimates in three of the trailing four quarters, delivering an average positive surprise of 7.77%.
Net 1 UEPS Technologies, Inc. is another Zacks Rank #2 company whose earnings have surpassed estimates in all of the trailing four quarters with an average positive surprise of 16.62%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>