Value
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.3 |
| P/S | 8.2 |
| EV/EBITDA | 3.2 |
| Fwd P/E | 7.6 |
| PEG | 4.1 |
| Analyst target | 4.0 |
- ▸Forward P/E: 16.3x
- ▸PEG: 2.36
ALLE · Why this verdict
Why Allegion (ALLE) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A high-quality industrial franchise with a 34% return on equity and a Piotroski F-Score of 7 out of 9 is navigating a challenging transition: two consecutive recent earnings misses, modest growth, and a leverage burden have combined to push the stock below its long-term trend line, while improving momentum indicators and meaningful analyst upside suggest the recovery setup is forming but not yet confirmed.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business delivers a 34% return on equity, 15% operating margins, and a Piotroski F-Score of 7 out of 9 — placing it in the upper tier of quality among industrial peers and providing a durable earnings floor from which to recover. Quality breakdown | Return on equity sustains above 25% and the Piotroski score remains at 7 or above over the next four quarters. | ↑Improving |
| CounterFree cash flow converts at only 78% of net income, below full conversion, and a debt-to-equity ratio of 1.1 introduces a leverage burden that diminishes overall balance sheet quality and leaves less financial flexibility if earnings soften further. | ||
Revenue growth is modest and earnings growth is essentially flat, while a debt-to-equity ratio of 1.1 reduces financial flexibility — a combination that leaves limited margin for error if the macroeconomic environment softens or interest costs rise. Components | Revenue growth accelerates above 8% year-over-year for 2 consecutive quarters as the organic demand environment improves. | ↑Improving |
| CounterModerate leverage is common in cash-generative industrial businesses, and the Piotroski score of 7/9 suggests the balance sheet is not under stress; the risk is manageable if free cash flow converts reliably and capex requirements remain controlled. | ||
After two consecutive beats in the prior year, the company missed consensus estimates in both of the two most recent quarters — by approximately 5% in the most recent print and by 2% the quarter prior — signaling a deterioration in execution or a more challenging operating environment that has not yet been fully reflected in forward estimates. Bear case | EPS beats resume for 2 consecutive quarters with positive surprises above 3%. | ↓Deteriorating |
| CounterBoth recent misses were modest in absolute terms (under 6%), and the underlying beat-then-miss pattern may reflect a temporary guidance reset rather than structural deterioration; the prior two-quarter beat streak suggests the business can return to outperformance. | ||
Despite trading below the 200-day moving average in a prior downtrend, MACD has turned bullish, OBV is rising, and momentum has recovered to 6.0 — suggesting the initial conditions for a technical recovery are forming, with 23% analyst upside providing a potential destination if the fundamental picture stabilizes. Momentum breakdown | Price crosses back above the 200-day moving average and the momentum score rises above 7.0 within 6 months. | ↑Improving |
| CounterA death cross pattern remains a concern, and the 200-day MA slope is still declining at approximately 3% per month; momentum could re-deteriorate on the next earnings miss, and the technical pattern resolves only on confirmed follow-through. | ||
The business delivers a 34% return on equity, 15% operating margins, and a Piotroski F-Score of 7 out of 9 — placing it in the upper tier of quality among industrial peers and providing a durable earnings floor from which to recover.
↑ImprovingQuality breakdown
- Expectation
- Return on equity sustains above 25% and the Piotroski score remains at 7 or above over the next four quarters.
CounterFree cash flow converts at only 78% of net income, below full conversion, and a debt-to-equity ratio of 1.1 introduces a leverage burden that diminishes overall balance sheet quality and leaves less financial flexibility if earnings soften further.
Revenue growth is modest and earnings growth is essentially flat, while a debt-to-equity ratio of 1.1 reduces financial flexibility — a combination that leaves limited margin for error if the macroeconomic environment softens or interest costs rise.
↑ImprovingComponents
- Expectation
- Revenue growth accelerates above 8% year-over-year for 2 consecutive quarters as the organic demand environment improves.
CounterModerate leverage is common in cash-generative industrial businesses, and the Piotroski score of 7/9 suggests the balance sheet is not under stress; the risk is manageable if free cash flow converts reliably and capex requirements remain controlled.
After two consecutive beats in the prior year, the company missed consensus estimates in both of the two most recent quarters — by approximately 5% in the most recent print and by 2% the quarter prior — signaling a deterioration in execution or a more challenging operating environment that has not yet been fully reflected in forward estimates.
↓DeterioratingBear case
- Expectation
- EPS beats resume for 2 consecutive quarters with positive surprises above 3%.
CounterBoth recent misses were modest in absolute terms (under 6%), and the underlying beat-then-miss pattern may reflect a temporary guidance reset rather than structural deterioration; the prior two-quarter beat streak suggests the business can return to outperformance.
Despite trading below the 200-day moving average in a prior downtrend, MACD has turned bullish, OBV is rising, and momentum has recovered to 6.0 — suggesting the initial conditions for a technical recovery are forming, with 23% analyst upside providing a potential destination if the fundamental picture stabilizes.
↑ImprovingMomentum breakdown
- Expectation
- Price crosses back above the 200-day moving average and the momentum score rises above 7.0 within 6 months.
CounterA death cross pattern remains a concern, and the 200-day MA slope is still declining at approximately 3% per month; momentum could re-deteriorate on the next earnings miss, and the technical pattern resolves only on confirmed follow-through.
Per-dimension breakdown
Quality
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 7.4 |
| Gross margin | 5.0 |
| Op margin | 8.8 |
| Net margin | 7.7 |
| Current ratio | 6.8 |
| FCF quality | 5.6 |
| Moat | 6.8 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 34%
- ▸Strong margins: 15%
- ▸Earnings quality warning: 74% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
5.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.7 |
| EPS growth | 5.2 |
Momentum
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.7 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 7.5 |
| Volume | 5.0 |
- ▸Overbought (RSI 86)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 86 (late-cycle distribution risk)
Sentiment
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.5 |
| Analyst rating | 7.0 |
| Price target | 5.8 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $547,640 (0.004% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.8 |
| quality rank | 8.0 |
| growth rank | 5.0 |
Technical
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 1.0 |
| 52w position | 7.7 |
| gap | 5.0 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.3 |
| days to cover | 6.9 |
| volatility | 4.7 |
| put call | 0.0 |
| implied vol | 7.6 |
| beta | 7.9 |
| debt equity | 4.9 |
| news risk | 6.0 |
- ▸Elevated put/call: 2.00
Catalyst
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 3.0 |
| dividend safety | 6.8 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:7.2>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:86d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (1)
- DEATH_CROSS:momentum=7.2>=5.0 recovering
Reward-to-Risk
-0.56
Upside
-8.4%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 86
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.2>=5.5. Top dim: Quality at 7.4; weakest: Technical at 3.4. No conviction either direction.
The strongest dimensions are Quality at 7.4, Insider at 7.3, and Momentum at 7.2; the weakest are Technical at 3.4, Peer rank at 5.3, and Catalyst at 5.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.56 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Financial Profile
Trip ifReturn on equity falls below 20% for 2 consecutive quarters.
- P2Consecutive Earnings Misses
Trip ifEPS positive surprise exceeds 3% for 2 consecutive quarters.
- P3Soft Growth With Leverage Burden
Trip ifRevenue growth exceeds 8% year-over-year for 2 consecutive quarters.
- P4Technical Recovery Forming
Trip ifPrice crosses above the 200-day moving average and momentum score rises above 7.0 for 4 consecutive weeks.