Is It Time to Consider Buying Allegion plc (NYSE: ALLE)?
Today we’re going to take a look at the well-established Allegion plc (NYSE: ALLE). The company’s shares have received a lot of attention due to a substantial price increase on the NYSE in recent months. With many analysts covering large cap stocks, we can expect all price sensitive announcements to have factored into the share price already. But what if there is still a buying opportunity? Today, I will analyze the most recent data on Allegion’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Allegion
What is Allegion worth?
The stock price looks reasonable at the moment under my multiple price model, where I compare the company’s price-to-earnings ratio to the industry average. In this case, I used the price-to-earnings (PE) ratio since there isn’t enough information to reliably forecast the stock’s cash flow. I find that Allegion’s 30.26x ratio trades slightly above the 26.59x ratio of its industry peers, which means if you buy Allegion today, you would pay a relatively low price for it. reasonable. And if you think Allegion should trade within that range, there isn’t much room for the share price to rise above other industry peers over the long term. So, is there another chance to buy cheap in the future? Since Allegion’s stock is quite volatile (i.e. its price movements are amplified relative to the rest of the market), this could mean that the price may go lower, giving us the opportunity to buy later. This is based on its high beta, which is a good indicator of stock price volatility.
What kind of growth will Allegion generate?
Investors looking for growth in their portfolio may wish to examine a company’s prospects before purchasing its shares. Buying a large company with a solid outlook for a cheap price is always a good investment, so let’s take a look at the company’s future expectations as well. Allegion’s profits over the next few years are expected to increase by 34%, indicating a very optimistic future. This should lead to more robust cash flow, fueling a higher share value.
What this means for you:
Are you a shareholder? ALLE’s bullish future growth appears to have been factored into the current stock price, with stocks trading around industry price multiples. However, there are also other important factors that we did not consider today, such as the financial strength of the company. Have these factors changed since you last reviewed ALLE? Will you have enough conviction to buy if the price fluctuates below the industry PE ratio?
Are you a potential investor? If you are keeping an eye on ALLE, this might not be the most optimal time to buy, given that it is trading around industry price multiples. However, the positive outlook is encouraging for ALLE, which means that it is worth taking a closer look at other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while the quality of the benefits is important, it is just as important to consider the risks that Allegion faces at this point. In terms of investment risks, we have identified 2 warning signs with Allegion, and understanding them should be part of your investment process.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St has no position in any of the stocks mentioned.
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