Allegion (ALLE -0.32%), a leading locks and access door company, saw its stock rise by 10.3% at 11 a.m. ET following the release of its first-quarter earnings report. The positive market reaction came after the company maintained its full-year guidance for mid-single-digit revenue growth and adjusted earnings per share (EPS) of $7.65-$7.85. Despite challenges in the residential housing market due to high interest rates and tariff uncertainties, Allegion’s strong fundamentals and growth prospects in electronic locks drove investor confidence.
The company’s performance in the quarter was marked by a high-single-digit increase in nonresidential sales, which offset the mid-single-digit decline in residential sales in the Americas region. Allegion’s focus on the convergence of electronics and mechanics in lock security continues to pay off, with electronics sales rising by a low double-digit rate. The growth was driven by a combination of ‘price realization’ (higher prices) and volume growth, resulting in a 4.9% increase in organic sales.
Investors were particularly encouraged by Allegion’s ability to navigate tariff-related costs. The company estimates $80 million in increased tariff-related costs in 2025, but the positive pricing news gave investors confidence in its ability to overcome this challenge. With Allegion trading at less than 18 times the midpoint of management’s 2025 EPS guidance, the stock appears to be an excellent value for investors who believe in the long-term potential of electronic locks and access doors.
Key Highlights
- Allegion’s stock rose 10.3% after Q1 earnings release
- Maintained full-year guidance despite market challenges
- Nonresidential sales grew at a high-single-digit rate
- Electronics sales increased by a low double-digit rate
- Trading at less than 18 times 2025 EPS guidance midpoint
Allegion’s strong performance and growth prospects in electronic locks and access doors make it an attractive investment opportunity in the security industry.
