Allegion (ALLE): smart locks and digital access, top quality

2026-06-23 · By Lubin Danilo, founder of Lubin Investment

Allegion (ALLE) is the global leader in smart locks and physical access systems (brands: Schlage, Von Duprin, LCN). In our screener, the company scores 9/10: only the cash collection delay criterion is slightly above our threshold. Its FCF per share stands at $7.52. But the current price of $130.93 is 18.7% above our entry target of $106.41.

• Allegion scores 9/10 in our quality screener.
• Free cash flow per share: $7.52. Current price: $130.93.
• Our entry target is set at $106.41: the current price is 18.7% above.
• Only the DSO (cash collection delay) criterion is slightly above our threshold.
• Duopoly with ASSA ABLOY on the North American smart lock market.

Who is Allegion?

Allegion is an Irish-American company specializing in physical security systems: smart locks, access systems, door control. Its flagship brands are Schlage (residential and commercial locks), Von Duprin (panic hardware), and LCN (door closers). The company was spun off from Ingersoll Rand in 2013 and is listed on the NYSE. It operates primarily in North America (approximately 80% of revenues) and in 130 countries in total. Its main market is secure access in commercial buildings, healthcare facilities, and educational institutions.

A score of 9/10: almost perfect

In our screener, Allegion passes 9 out of 10 criteria. The only slightly failing criterion is DSO (Days Sales Outstanding), the average days it takes to collect customer receivables. This criterion is slightly above our threshold, suggesting that Allegion's customers take slightly longer than our database norm to pay their invoices. This is not a major red flag, but it prevents the company from achieving a perfect score. All other criteria are validated: FCF growth, margins, share buybacks, cash profitability, valuation relative to FCF.

The business model: duopoly and recurring revenues

Allegion operates in a de facto duopoly with Swedish company ASSA ABLOY on the North American smart lock and access systems market. This leadership position gives the company significant pricing power. The business model generates recurring revenues through two mechanisms: subscriptions to cloud services (remote access management, digital badges) and the regular replacement of locks and access systems (average lifecycle of 7 to 10 years). These structural characteristics explain why the FCF per share stands at $7.52 and the quality of earnings-to-cash conversion is high.

18.7% above our target: patience required

Our entry target, calculated from the FCF per share ($7.52) and a multiple consistent with the company's quality, stands at $106.41. The current price of $130.93 is 18.7% above. This is not the highest premium in our database (Shopify is at 56%, Apple at 54%) but it is sufficient for our method not to give an entry signal today. The required discount is 18.7%: modest compared to others, but discipline requires consistency.

Allegion in the physical security context

The smart lock and access systems market is in structural growth. The digitization of buildings (smart buildings), the demand for security in healthcare and educational facilities, and the transition to keyless physical access are long-term trends that directly benefit Allegion. Its position in this duopoly allows it to benefit from these trends with limited competition. This is a profile worth watching: if the price returns toward our target, the stock will become attractive under our method.

FAQ

What does Allegion actually do?

Allegion designs and markets smart locks, access control systems, panic hardware, and door closers. Its main brands are Schlage, Von Duprin, and LCN. It sells primarily to commercial buildings, hospitals, schools, and high-end residential properties.

What is DSO and why is it slightly failing at Allegion?

DSO (Days Sales Outstanding) measures the average number of days a company takes to collect its customer receivables. A high DSO means customers pay slowly, which may indicate commercial pressure or public-sector customers (who pay more slowly). At Allegion, the DSO is slightly above our threshold, probably related to its institutional customer base (hospitals, schools). It is not a critical signal but it is the only criterion preventing it from achieving a perfect score.

What is a duopoly and why is it an advantage?

A duopoly is a market dominated by two main players. In Allegion's case, the North American smart lock market is dominated by Allegion and ASSA ABLOY. This market structure reduces price competition and allows Allegion to maintain high margins. This is equivalent to a structural moat (competitive moat).

Is Allegion exposed to competition from tech companies (Google, Apple)?

Yes, partially. Google (Nest) and Apple (HomeKit) have ambitions in home automation and smart locks. But the commercial and institutional market — the majority of Allegion's revenues — is very different from the mass residential market. Security standards, certifications, and institutional relationships create significant barriers to entry for tech players.

When could Allegion be in our buy zone?

Allegion would enter our buy zone if its price falls to $106.41 or below. This represents an 18.7% decline from the current price. This discount can occur during a market correction, a disappointing earnings release, or a downward revision of growth expectations. Our method waits for this moment without forcing entry.

Voir l'analyse ALLE sur Lubin Investment

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I have analyzed stocks through their fundamentals for several years and invest my own money with this method. I codified it into a tool that judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).