- Price
- $154.74
- Fair value
- $202.00
- Discount
- 23.4%
- Uncertainty
- Medium
- LSEG rating
- 2.33
- Moat
- Wide
- Next earnings
- 2026-10-22
- Next earnings is estimate
- No
- Company name
- Allegion
- Sector
- Security products & door hardware
- About
- Allegion makes locks, door hardware and access control products for buildings and homes. Its brands include Schlage, Von Duprin and LCN in the US and Interflex and CISA in Europe. It sells mechanical locks, exit devices, door closers, steel doors and frames, and electronic locks that connect to access control software. Most customers are schools, hospitals, offices, government buildings and home owners, and distributors and installers buy most of its products. It reports two segments: Allegion Americas and Allegion International. In Q2 2026, the Americas gave $918.6 million of the $1,151.5 million of revenue. Allegion makes money from the margin on these products, and replacement and renovation of existing buildings give a large part of its demand. It also buys small companies to add products, such as Door Components in March 2026 and Overly Door Company in October 2026.
- Thesis
- Allegion trades at a discount because investors doubt that it can grow margins in a slow construction market. Barclays said in April 2026 that margins were flat or down for four quarters in a row. In Q1 2026, the adjusted operating margin fell to 21.2% from 22.7%, and organic growth came from higher prices while volumes fell. Europe is weak too: International organic revenue fell 5.3% in Q1 2026 and 1.2% in Q2 2026, with low demand in Germany. Tariffs add a cost risk, because Allegion buys about 20% to 25% of its cost of goods from Mexico. For the gap to close, the adjusted operating margin must keep growing from a year earlier, as it did in Q2 2026 (24.2% against 23.7%), Americas organic growth must come from volume as well as price, and International organic revenue must return to growth. Allegion must also reach its raised 2026 guidance of $8.85 to $9.00 of adjusted EPS. The first test is the Q3 2026 report on October 22, 2026. The second test is the Q4 2026 report and the 2027 guidance, expected in February 2027. If margins keep growing, the gap can close over the next two to four quarters. The main risk is a fall in US non-residential construction that cuts volumes.
- Risks
- Demand depends on construction and renovation of schools, hospitals, offices and homes. Higher interest rates and lower public budgets can delay projects and cut volumes. In Q1 2026, organic growth came from higher prices while volumes fell.
Allegion buys about 20% to 25% of its cost of goods from Mexico and 5% to 10% from other countries outside the US and China. New US tariffs raise costs. Allegion offset tariff costs with price increases through June 2026, but more price increases can cut demand.
Europe is weak. International organic revenue fell 5.3% in Q1 2026 and 1.2% in Q2 2026, with low demand in Germany. An ERP system change also cut volumes at a mechanical business in Q1 2026.
Allegion grows partly by buying companies, such as Door Components and Overly Door Company in 2026. A bad purchase or a high price can lower returns on capital.
Electronic locks and access control software bring new competitors, such as technology companies, into Allegion's market. If Allegion loses share in electronic products, its growth can slow.
- Balance sheet
- Cash: $321M
Debt: $2.0B
Net debt: $1.7B
Interest cover: 9.2×
Undrawn credit line: $734M, to May 2030
Debt due within 12 months: $0.0M
Last debt due: 2034
At June 30, 2026, Allegion had $320.6 million of cash and $2,031.1 million of debt, net of issuance costs. The debt is $1.8 billion of senior notes and $240.6 million drawn on its revolving credit facility. The notes pay fixed rates of 3.500% to 5.600% and are due from October 2027 to May 2034. The revolving credit facility is $1.0 billion, at SOFR plus 1.125%, and ends in May 2030. About $734 million of it was free to borrow, after the drawn amount and $25.3 million of letters of credit. Interest cover is operating income of $450.0 million divided by interest expense of $49.0 million in the first half of 2026. Available cash flow was $260.8 million in the first half of 2026. In Q2 2026, Allegion bought back about 0.9 million shares for about $120 million and paid about $47 million of dividends.
As of 2026-06-30.
- Checkpoints
- Oct 22, 2026: Q3 2026 results: margins and volumes. Pending. Watch: An adjusted operating margin above the Q3 2025 level, Americas organic growth with positive volume, and unchanged 2026 guidance pass; a lower margin or a cut to the guidance fails.
Feb 2027 (estimate): Full-year 2026 results and 2027 guidance. Pending. Watch: Adjusted EPS within $8.85 to $9.00 and 2027 guidance with organic growth and margin growth pass; flat margins or falling International revenue in the guidance fail.
- Recent events
- 2026-10-08: Allegion said that it will report Q3 2026 results on October 22, 2026, before the market opens.
2026-10-05: Allegion bought Overly Door Company, a US maker of acoustic, blast-resistant, bullet-resistant and vault doors, founded in 1888. Overly joins Allegion Americas. Allegion did not disclose the price.
2026-07-23: Allegion reported Q2 2026 results. Revenue was $1,151.5 million, up 12.7%, and up 6.9% on an organic basis. Americas organic revenue grew 8.9%, with non-residential and residential both up high single digits. International organic revenue fell 1.2% on weak demand in Germany and other European markets. The adjusted operating margin rose to 24.2% from 23.7%. Allegion raised its 2026 guidance for organic growth to 3.5% to 4.5% and for adjusted EPS to $8.85 to $9.00.
2026-04-28: Allegion reported Q1 2026 results. Revenue was $1,033.6 million, up 9.7%, and up 2.6% on an organic basis, from higher prices with lower volumes. International organic revenue fell 5.3%, partly because of an ERP system change. The adjusted operating margin fell to 21.2% from 22.7%, and adjusted EPS fell 3.2% to $1.80. On the same day, Barclays cut its price target to $161 from $165 and said investors will wait for evidence of margin growth.
2026-03-02: Allegion bought Door Components, Inc. (DCI), a US maker of hollow metal doors and frames, for about $70 million net of cash. It paid with cash and borrowings under its revolving credit facility.