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ALLEGION PLC Scores High in Buffett Model Evaluation

ALLEGION PLC shows strong potential with an 82% rating in Warren Buffett's Patient Investor model, highlighting solid fundamentals and valuation. However, it does face a challenge with Return on Equity, which could affect investor sentiment.

Date: 
AI Rating:   6

Detailed Analysis of ALLEGION PLC

ALLEGION PLC (ALLE) has achieved an 82% rating according to Warren Buffett's Patient Investor model, which emphasizes firms with predictable profitability and low debt. This rating is indicative of substantial interest in the company, as a score above 80% suggests favorable conditions.

Earnings Predictability

The company passes the earnings predictability test, which signifies their solid ability to generate consistent earnings over time.

Debt Management

ALLEGION has passed the debt service criterion, suggesting it maintains a manageable level of debt, thereby reducing financial risk.

Return on Equity (ROE)

Unfortunately, ALLEGION fails the Return on Equity test. This is an area of concern, as a low or failing ROE can indicate inefficiency in utilizing shareholder investments.

Other Financial Metrics

  • Return on Total Capital: Pass
  • Free Cash Flow: Pass
  • Use of Retained Earnings: Pass
  • Share Repurchase: Pass
  • Initial Rate of Return: Pass
  • Expected Return: Pass

The overall positive metrics in categories such as free cash flow and total capital return point to a healthy financial position despite the setback with ROE. Investors might view this discrepancy cautiously, as poor ROE can influence stock price sentiments negatively.

Overall, ALLEGION PLC presents an interesting prospect for investors, especially those aligned with long-term investment strategies as espoused by Warren Buffett. However, the failing ROE metric might warrant a more in-depth analysis before making investment decisions.

Stocks:  ALLE