Allegion's fourth quarter results were met with a negative market reaction, reflecting cautious sentiment around its weaker-than-expected performance in key segments. Management highlighted that while Americas nonresidential business continued to show resilience, the residential side ended the year softer than anticipated, with CEO John H. Stone noting, “resi in the Americas ended the year softer than we had contemplated.” Electronics and acquisition-driven growth partially offset these headwinds, but volume declines in residential and international mechanical businesses weighed on overall results. Management acknowledged these challenges and emphasized their disciplined approach to pricing and productivity.
Is now the time to buy ALLE? Find out in our full research report (it’s free for active Edge members).
Allegion (ALLE) Q4 CY2025 Highlights:
- Revenue: $1.03 billion vs analyst estimates of $1.04 billion (9.3% year-on-year growth, in line)
- Adjusted EPS: $1.94 vs analyst expectations of $1.98 (2% miss)
- Adjusted EBITDA: $248.2 million vs analyst estimates of $269.4 million (24% margin, 7.9% miss)
- Adjusted EPS guidance for the upcoming financial year 2026 is $8.80 at the midpoint, missing analyst estimates by 0.6%
- Operating Margin: 20.3%, in line with the same quarter last year
- Organic Revenue rose 3.3% year on year (miss)
- Market Capitalization: $13.67 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Allegion’s Q4 Earnings Call
- Joseph John O'Dea (Wells Fargo) asked about residential segment softness and pricing response; CEO John H. Stone explained residential ended the year weaker than expected but saw no significant pricing changes, with inventory corrections expected to be brief.
- Tomohiko Sano (JPMorgan) inquired about international electronics and geographic trends; CEO John H. Stone detailed strong growth in Western Europe, particularly the DACH region, and noted continued weakness in Australia and New Zealand.
- Brett Logan Linzey (Mizuho) questioned pricing dynamics and net pricing capture for 2026; CFO Michael J. Wagnes indicated more reliance on list price increases and less overall pricing benefit as inflation slows.
- Robert Schultz (Baird) asked about the M&A pipeline and competition; CEO John H. Stone described a very active pipeline aligned with strategic priorities, emphasizing disciplined capital deployment for future acquisitions.
- Christopher M. Snyder (Morgan Stanley) sought clarity on Americas margin trends and Q4 decline; CFO Michael J. Wagnes attributed the decrease to residential volume declines and confirmed margin expansion is expected after Q1 2026 as fundamentals remain sound.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely monitor (1) signs of stabilization or recovery in U.S. residential demand, (2) sustained growth and integration of recent acquisitions in both core mechanical and electronics portfolios, and (3) margin improvement from pricing discipline and productivity initiatives. Progress in international markets and the pace of electronics adoption will also be important indicators of Allegion’s ability to deliver on its strategic objectives.
Allegion currently trades at $158.76, down from $179.50 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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