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Here's Why You Should Add Allegion (ALLE) to Your Portfolio

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Allegion plc (ALLE - Free Report) is well-poised for growth, courtesy of strength across its businesses and accretive acquisitions. Handsome rewards to shareholders add to the stock’s appeal.

Headquartered in Dublin, Ireland, Allegion is a leading global provider of security products and solutions for business and domestic purposes. ALLE offers an extensive portfolio of mechanical and electronic security products, including doors and door systems, electronic security products, biometric and mobile access control systems, locks, locksets, exit devices, portable locks and workforce productivity systems and other accessories.

Shares of Allegion have gained 19% in the past year. The company, which belongs to the Zacks Security and Safety Services industry, currently carries a Zacks Rank #2 (Buy).

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Let’s delve into the factors that make this company a smart investment choice at the moment.

Business Strength: Allegion is seeing strong momentum across its segments. Stable demand across end markets like education, healthcare, government, hospitality and retail and the recent acquisition of Krieger and Unicel within the non-residential business are driving the Allegion Americas segment.  The increase in demand for residential products also bodes well.

An increase in demand for electronic security products, driven by growing awareness about the security and safety of people and infrastructure, is aiding the Allegion International segment. Increased adoption of advanced technologies and solutions in the electronics security products market, such as wireless locks and mobile-enabled smart locks, is expected to drive Allegion’s performance in the quarters ahead.

Expansion Efforts: Allegion is focused on strengthening its competency through acquisitions. In the second quarter, acquisitions boosted the company’s sales by approximately 1%. In June 2024, the company acquired Krieger Specialty Products. The addition of Krieger’s expertise in specialty solutions will enable Allegion to strengthen its door and frame portfolio. Also, in the same month, it purchased Unicel Architectural Corp. The inclusion of Unicel’s proficiency in glass and building envelope solutions will enable it to boost its product portfolio within the non-residential business. Both the acquired businesses have been incorporated into the Allegion Americas segment.

Also, in March 2024, Allegion completed the acquisition of Spain-based Montajes Electronics Dorcas S.L. (Dorcas), which has been incorporated into the Allegion International segment. The inclusion of Dorcas’ expertise in electric strikes and lock solutions, coupled with its strong innovation capabilities, will enable Allegion to boost its security products portfolio. It will also help the company to expand its presence in lucrative end markets like healthcare and education.

The company also acquired Livingston, Scotland-based Boss Door Controls in February 2024, thereby expanding its U.K. business with a complementary portfolio and broader channel access. Boss Door Controls is part of the Allegion International segment. The company acquired Plano Group through one of its subsidiaries in January 2023. The acquisition expanded ALLE’s Interflex portfolio and AWFM business with new capabilities in SaaS models and recurring revenue solutions. In July 2022, the company acquired Stanley Black & Decker, Inc.’s Access Technologies Business for $900 million. With this acquisition, Allegion has been able to enhance its access, egress and access control solutions offerings.

Rewards to Shareholders: ALLE continues to increase shareholders’ value through dividend payments and share repurchases. Dividends paid out totaled $83.8 million in the first six months of 2024, reflecting an increase of 5.7% year over year. In the same period, Allegion repurchased shares for $80 million. In 2023, it disbursed dividends worth $158.7 million and bought back shares for $59.9 million. At the time of exiting the second quarter, the company was left to repurchase shares worth $380 million under its 2023-approved program. In February 2024, it announced a 7% hike in its quarterly dividend rate, which is now 48 cents per share.

Other Stocks to Consider

Other top-ranked companies are discussed below.

Clear Secure, Inc. (YOU - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

YOU delivered a trailing four-quarter average earnings surprise of 56.7%. In the past 60 days, the Zacks Consensus Estimate for Clear Secure’s 2024 earnings has increased 18.4%.

Tetra Tech, Inc. (TTEK - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 9.5%.

In the past 60 days, the Zacks Consensus Estimate for TTEK’s fiscal 2024 earnings has increased 0.7%.

Atmus Filtration Technologies Inc. (ATMU - Free Report) currently carries a Zacks Rank of 2. ATMU delivered a trailing four-quarter average earnings surprise of 13.4%.

In the past 60 days, the consensus estimate for Atmus’ 2024 earnings has increased 3.1%.

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