Analysts predict Allegion's revenue growth to slow down, with a forecasted 2.4% annual growth rate until 2024, well below the historical 5.7% p.a. growth. This is slower than the expected industry growth of 5.2% annually. However, the business' prospects remain steady with no major changes.
EPS growth outshines Allegion's yearly share price gain of 8%. Despite falling short of the market, Allegion's TSR of 13% over the last year surpasses the average 10% return over half a decade. Returns may improve with business fundamentals.
Allegion's high ROE could be risky due to its high debt level. Its performance may falter if borrowing becomes difficult. A high ROE without debt could signify a quality business, but future profit growth and required investment should also be considered.
Allegion's consistent and high ROCE, along with its ability to reinvest capital at these rates, suggests strong future potential. Despite the stock being more 'expensive' than before, the strong fundamentals make it worthy of further research.
Allegion's high P/E ratio, in combination with a weak earnings forecast and slower growth, poses a potential risk to its share price. Current price levels may be unsustainable without substantial improvements.
Allegion's 17% EPS growth and its reinvestment strategy are considered attractive for investors. Its sturdy dividend record, with about 19% increase yearly and a low chance of dividend cuts due to solid business growth and conservative payout ratio, promise potential value for shareholders.
Analyst Julian Mitchell fears Allegion's underperformance in the slowing U.S. non-residential buildings market. Barclays also anticipates negative investor response to Allegion's potential acquisition of Carrier's security unit due to valuation and leverage concerns.
Allegion's consistent EPS growth and high TSR suggest positive long-term performance. The market's pessimism, as the EPS growth exceeds the share price increase, might present a buying opportunity if sustainable growth potential continues.
A high ROE, while often a positive sign, could also indicate high debt levels which present risks. Moreover, a high ROE doesn't always mean more profit. The use of debt in Allegion's capital structure although enhances ROE, it escalates risk and limits future company options.
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