Allegion PLC Earns High Rating from Warren Buffett Model

A recent report indicates that Allegion PLC (ALLE) has received an impressive score of 82% under the Warren Buffett Patient Investor strategy. This rating suggests strong fundamentals and reasonable valuation, which could potentially enhance its stock price in the market.

Date: 07-10-2024

AI Rating: 7

The analysis of Allegion PLC reveals several critical factors regarding its performance indicators:

Earnings Predictability: The stock has passed this criterion, indicating a stable and reliable earnings outlook which is favorable for investors.
Debt Service: Similarly, it passed the debt service test, suggesting the company is managing its debt well, further enhancing its financial health.
Return on Equity: Unfortunately, Allegion failed this criterion. A low return on equity could imply that the company is not effectively using its equity to generate profits.
Return on Total Capital: The passed rating on this metric shows that Allegion is efficiently utilizing its total capital to generate returns.
Free Cash Flow: The company also passed this measure, indicating strong cash generation, which is vital for funding operations, paying dividends, and facilitating growth.
Use of Retained Earnings: This appeared as a pass, suggesting Allegion is effectively reinvesting profits back into the business for growth opportunities.
Share Repurchase: The positive rating in this area indicates that the company is engaging in share buyback programs, which can enhance shareholder value.
Initial Rate of Return and Expected Return: Both passed, indicating that the initial return on investments and future expected returns are favorable for investors.

Overall, the strong scores in earnings predictability, free cash flow, and effective debt management support a positive outlook for Allegion PLC stock. The failure in return on equity, however, might be a concern for some investors, as efficient use of equity is crucial for long-term profitability.

Stocks: ALLE