Allegion plc (ALLE Quick QuoteALLE - Free Report) reported third-quarter 2026 adjusted earnings of $2.60 per share, up 13% year over year. The figure beat the Zacks Consensus Estimate of $2.49 by 4.4%, supported by strong organic growth and margin expansion.

Revenues increased 9.6% year over year to $1.17 billion, beating the Zacks Consensus Estimate of $1.13 billion by 3.4%. Organic revenues grew 7.2%, driven by strength in the Americas non-residential business, volume growth and price realization.

ALLE's Revenue Performance

Allegion's organic revenue growth of 7.2% reflected a 3.8% contribution from price realization and 3.4% from volume growth. Acquisitions and divestitures boosted revenues by 2.6%, while foreign currency had an adverse impact of 0.2%.

The company reports revenues under two segments, Allegion Americas and Allegion International. A brief discussion of quarterly results is provided below.

Allegion plc Price, Consensus and EPS Surprise

Allegion price-consensus-eps-surprise-chart | Allegion Quote

Allegion's Americas Segment Drives Growth

Revenues from Allegion Americas increased 11.7% year over year to $942.4 million. The figure accounted for 80.4% of the quarter's revenues. Organic revenues increased 9.1%, supported by low-double-digit growth in the non-residential business and mid-single-digit growth in the residential business.

The non-residential business benefited from volume growth and price realization, while residential growth was supported by pricing. The electronics business registered low-double-digit organic growth. Price realization contributed 4.5% to growth, while volumes increased 4.6%. Acquisitions added 2.6% to revenues.

Adjusted operating income for the segment increased 12.6% year over year to $283.8 million. The adjusted operating margin expanded 20 basis points (bps) to 30.1%, benefiting from favorable volume leverage and productivity gains, partially offset by acquisition-related headwinds.

ALLE's International Segment Faces Headwinds

Revenues from Allegion International increased 1.8% year over year to $230.2 million, accounting for 19.6% of total quarterly revenues. Organic revenues declined 0.2%, reflecting softness in European markets.

Price realization contributed 1.3%, while volumes declined 1.5%. Acquisitions and divestitures contributed 2.5% to reported revenues, while currency movements created a 0.5% headwind.

Adjusted operating income decreased 1.2% year over year to $31.9 million. The adjusted operating margin contracted 40 bps to 13.9%, primarily due to unfavorable volume and mix, partially offset by pricing and productivity benefits.

Allegion's Margin Profile

In the quarter, Allegion's cost of revenues increased 7.6% year over year to $624.4 million. Gross profit increased 11.9% to $548.2 million. Selling and administrative expenses rose 3% to $263.6 million.

Adjusted EBITDA increased 12.4% year over year to $308 million. The adjusted EBITDA margin expanded 60 bps to 26.3%, driven by volume leverage and favorable pricing and productivity, net of inflation and investment.

Adjusted operating income increased 12.5% year over year to $289.7 million. The adjusted operating margin expanded 60 bps to 24.7%. Interest expense declined 9% to $24.2 million. The adjusted effective tax rate increased to 17.5% from 14.9% in the year-ago quarter.

ALLE's Balance Sheet and Cash Flow

Allegion exited the third quarter of 2026 with cash and cash equivalents of $388.1 million compared with $356.2 million at the end of 2025. Long-term debt stood at $2.03 billion, higher than $1.98 billion at 2025-end.

In the first nine months of 2026, net cash generated from operating activities was $604 million, up 11.1% year over year. Capital expenditures totaled $64.6 million compared with $58.5 million in the year-ago period. Available cash flow increased 11.2% to $539.4 million.

During the first nine months, the company repurchased shares worth $280.3 million and paid dividends totaling $140.2 million. In the third quarter alone, share repurchases totaled approximately $120 million, while dividends paid were approximately $46 million.

Allegion Raises 2026 Outlook

Allegion has raised its 2026 revenue guidance. The company now expects reported revenues to increase 9.5-10.5% year over year, higher than the previous projection of 7.5-8.5%. Organic revenue growth is anticipated to be 5-6%, up from the earlier estimate of 3.5-4.5%.

Adjusted earnings are now projected to be $9.05-$9.10 per share, higher than the previous guidance of $8.85-$9.00. The company expects reported earnings of $8.35-$8.40 per share compared with $7.95-$8.10 projected earlier.

Allegion continues to expect available cash flow to be 85-95% of adjusted net income. The adjusted effective tax rate is projected to be approximately 18-19%, while average diluted shares outstanding are estimated at 85.6 million.

Zacks Rank & Key Picks

The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are discussed below.

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