Allegion (ALLE): Evaluating Valuation Following Major LCN Senior Swing Product Innovations

Allegion has just rolled out a new wave of enhancements to its LCN Senior Swing series, highlighting AdaptivIQ and Smart Power Boost technologies. These upgrades are designed to make life easier for installers and users in demanding environments.

See our latest analysis for Allegion.

These new innovations land at a moment when Allegion’s stock has shown robust momentum, with a year-to-date share price return of 29.1% and a total shareholder return of 19.6% over the past twelve months. The company’s recent event participation and fresh product rollouts reflect underlying confidence and could support this positive trend for longer-term investors.

If you’re seeking more opportunities in the security and technology sector, this is a perfect time to discover fast growing stocks with high insider ownership.

This recent momentum puts Allegion in the spotlight. Given the strong performance already reflected in its share price, investors must now ask whether the stock has room to run or if the market has already accounted for its future potential.

Most Popular Narrative: 9.3% Undervalued

With Allegion’s last close price of $166.03 trailing the most popular narrative’s fair value of $183.09, the numbers suggest there could be upside ahead. The current market price is noticeably below the consensus valuation, prompting debate over whether recent growth catalysts are fully reflected in today’s stock price.

Robust expansion in smart and connected security solutions, particularly through strong electronics growth (double-digit in Q2) and new launches such as SimonsVoss's batteryless FORTLOX electronic cylinder, positions Allegion to benefit from increased adoption of IoT and digital building management, supporting higher future revenues and improved margin mix.

Read the complete narrative.

Curious what projections could justify such a boost in fair value? There are a handful of aggressive revenue, margin, and earnings targets built into this narrative, along with expectations of higher profitability from recurring revenues. Dive in to uncover which future milestones are powering this high-conviction valuation.

Result: Fair Value of $183.09 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in Allegion's international segment and any downturn in nonresidential demand could still undermine the bullish outlook.

Find out about the key risks to this Allegion narrative.

Another View: Is the Market Already Pricing In the Upside?

Looking at Allegion’s current price-to-earnings ratio of 22.3x, it stands as more expensive than both its industry peers at 20x and the broader US Building industry average of 19x. The fair ratio sits right at 22.3x, meaning today’s price is very close to what the market might ultimately see as justified. Does this limit the room for near-term gains, or is something bigger on the horizon?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Allegion Narrative

If you see things differently or want to take a hands-on approach, it's easy to review the numbers and craft your own Allegion narrative in just a few minutes, so why not Do it your way?

A great starting point for your Allegion research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Smart investors always have their eyes on the next big trend. Don’t risk missing out when powerful opportunities are only a click away.

• Identify tomorrow’s disruptors by targeting these 25 AI penny stocks, which are transforming industries with real-world applications of artificial intelligence.
• Build resilience into your portfolio and capture stable returns with these 15 dividend stocks with yields > 3%, offering yields above 3% in today’s market.
• Capitalize on undervalued gems by using these 913 undervalued stocks based on cash flows to spot high-potential companies supported by strong cash flows.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com