# Allegion plc (ALLE) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-27  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/alle/thesis · /memo/alle

## Financial Snapshot

---
title: "Step 04 — Financial Snapshot & Quality"
ticker: ALLE
company: Allegion plc
source: coverage-next-full
date: 2026-05-28
---

### Step 04 — Financial Snapshot & Quality: Allegion plc (ALLE)

#### 1. Five-Year Financial Snapshot [S1]

| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | 5y CAGR |
|--------|--------|--------|--------|--------|--------|---------|
| Revenue ($M) | 2,867 | 3,272 | 3,651 | 3,772 | 4,067 | 9.1% |
| Gross Profit ($M) | 1,205 | 1,322 | 1,582 | 1,669 | 1,838 | 11.1% |
| Gross Margin | 42.0% | 40.4% | 43.3% | 44.2% | 45.2% | +320 bps |
| Operating Income ($M) | 530 | 586 | 708 | 781 | 860 | 12.8% |
| Operating Margin | 18.5% | 17.9% | 19.4% | 20.7% | 21.1% | +260 bps |
| EBITDA ($M) | 613 | 684 | 820 | 900 | 993 | 12.8% |
| Net Income ($M) | 483 | 458 | 540 | 598 | 644 | 7.5% |
| Diluted EPS ($) | 5.34 | 5.19 | 6.12 | 6.82 | 7.44 | 8.6% |
| Operating Cash Flow ($M) | 489 | 460 | 601 | 675 | 784 | 12.5% |
| Free Cash Flow ($M) | 443 | 396 | 516 | 583 | 686 | 11.6% |
| FCF Margin | 15.5% | 12.1% | 14.1% | 15.5% | 16.9% | +140 bps |
| Shares Outstanding (M) | ~91 | ~89 | ~87 | ~86 | ~86 | (1.4%) |

**Key observations [J1]:**
- Revenue grew 42% over 4 years; ~50% organic, ~50% from Access Tech (2022) + bolt-ons
- Operating margin expanded ~260 bps despite 2022 dip from Access Tech integration
- FCF growth (~11.6% CAGR) outpaced revenue (9.1%) — quality of growth indicator
- Share count shrank modestly (~5% over 4 years) via buybacks — disciplined, not aggressive

---

#### 2. Quality of Earnings — Adjustments

| Adjustment | Direction | Approximate Annual Impact |
|-----------|-----------|---------------------------|
| Restructuring / acquisition-related charges | Add back to op income | $20–40M/yr typical |
| Stock-based compensation | Already in GAAP op income (~$30M) | — |
| Amortization of acquired intangibles | Add back for "adjusted" earnings | ~$50–60M/yr |
| Non-cash impairments | Episodic; none recent | — |
| Pension/OPEB items | Minor | — |

**Adjusted vs. GAAP gap [S2]:**
- FY2025 reported diluted EPS: $7.44
- FY2025 adjusted EPS guidance midpoint: ~$7.75
- Gap ~$0.30, or ~4% — relatively narrow, suggesting clean earnings quality

---

#### 3. Cash Flow Quality

| Metric | FY2023 | FY2024 | FY2025 |
|--------|--------|--------|--------|
| Net Income | $540M | $598M | $644M |
| Operating Cash Flow | $601M | $675M | $784M |
| OCF / Net Income | 111% | 113% | 122% |
| FCF | $516M | $583M | $686M |
| FCF / Net Income | 96% | 98% | 107% |

**Assessment [J1]:** Cash conversion >95% consistently, trending above 100% in FY2025. Working capital management has improved post-2022 supply chain disruption.

---

#### 4. Balance Sheet Quality

| Metric | FY2023 | FY2024 | FY2025 |
|--------|--------|--------|--------|
| Cash & Equivalents ($M) | 468 | 504 | 356 |
| Total Debt ($M) | 2,428 | 2,021 | 1,980 |
| Net Debt ($M) | 1,960 | 1,517 | 1,624 |
| Net Debt / EBITDA | 2.4x | 1.7x | 1.6x |
| Goodwill ($M) | 1,443 | 1,489 | 1,912 |
| Intangibles ($M) | 573 | 569 | 826 |
| Tangible Equity ($M) | (697) | (557) | (670) |
| Total Equity ($M) | 1,318 | 1,501 | 2,068 |

**Notes [S1, J1]:**
- Goodwill spike in FY2025 (+$423M) reflects 2025 acquisitions
- Tangible equity is negative (typical for serial M&A acquirers) but not concerning given strong FCF
- Net debt / EBITDA at 1.6x is well below the 2.5–3.0x covenant comfort zone
- All public debt is investment-grade

---

#### 5. Adversarial Research Sweep

##### Short Reports
- **No active short reports** identified as of May 2026
- Short interest as % of float: ~1.5% (low — not a contested name) [S3]

##### SEC / Regulatory
- **No active SEC enforcement actions** against Allegion
- Standard 10-K risk factor disclosures: tariffs, FX, integration, cybersecurity, competition — all routine

##### Litigation
- Routine product-liability, patent, and IP litigation typical for a manufacturer of safety-critical products
- No publicly-disclosed material litigation losses or pending judgments >$25M as of FY2025 10-K [J1]
- Asbestos liabilities — minimal residual exposure from predecessor (Ingersoll Rand assumed most pre-spin-off liabilities)

##### Investigations / Whistleblower
- No publicly-reported whistleblower allegations or DOJ investigations identified

##### Accounting / Restatements
- **No restatements** in the post-spin-off (2014+) history
- Auditor: PricewaterhouseCoopers (PwC) — long tenure
- No material weakness disclosures in recent SOX assessments

##### Governance Red Flags
- None significant. Annual say-on-pay approval at 85% [S4] — moderate (not stellar, not concerning)
- Anti-hedging and clawback policies in place
- No related-party transactions of note

##### ESG / Sustainability Risk
- Standard manufacturer exposure (Scope 1+2 emissions; energy use in facilities)
- Published sustainability report with science-based targets
- Not flagged on major ESG short lists

##### Industry-Specific Risks
- Tariff exposure on Chinese components (~3–5% of COGS) — mitigated via pricing pass-through historically
- Residential cyclicality (~20% of revenue exposed to housing starts)
- Patent expirations — managed via continuous new product introduction

##### Adversarial Conclusion
**Clean adversarial profile.** No active short theses, regulatory actions, restatements, or governance red flags. The bear case is fundamentally about cyclicality and competitive position (ASSA ABLOY pressure), not about accounting or governance.

---

#### 6. Working Capital Trends

| Metric | FY2023 | FY2024 | FY2025 |
|--------|--------|--------|--------|
| Days Sales Outstanding (DSO) | ~50 | ~50 | ~50 |
| Days Inventory On Hand (DIO) | ~75 | ~70 | ~70 |
| Days Payable Outstanding (DPO) | ~35 | ~38 | ~40 |
| Cash Conversion Cycle | ~90 | ~82 | ~80 |

**Trend:** Modest improvement; supply chain normalization post-2022 disruption.

---

#### 7. Capital Structure Snapshot

| Component | Amount | Notes |
|-----------|--------|-------|
| Senior unsecured notes | ~$2.0B | Investment-grade (Baa2 / BBB) |
| Revolving credit facility | ~$500M (undrawn) | Backup liquidity |
| Cash & equivalents | $356M | Held primarily in US |
| Equity (book) | $2.07B | Negative tangible equity due to goodwill |
| Equity (market) | ~$11.4B | Trading ~5.5x book |

---

#### 8. Source Index

| ID | Source | Date |
|----|--------|------|
| S1 | `ALLE_financials/other/stockanalysis_summary.md` + `xbrl/xbrl_summary.md` | 2026-05-27 |
| S2 | `ALLE_financials/other/consensus.md` (guidance) | 2026-05-27 |
| S3 | Public short interest data (Yahoo Finance / StockAnalysis) | 2026-05-27 |
| S4 | `ALLE_financials/proxy/governance_and_compensation.md` | 2026-05-27 |
| J1 | Analyst judgment | 2026-05-28 |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/ALLE/fundamental

## Navigation

- Overview: /stocks/alle
- Financials (this page): /stocks/alle/financials
- Thesis: /stocks/alle/thesis
- Investment Memo: /memo/alle
- Coverage universe: /stocks