Shareholders might have noticed that Allegion plc (NYSE:ALLE) filed its third-quarter result this time last week. The early response was not positive, with shares down 7.0% to US$143 in the past week. Revenues were US$967m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.99 were also better than expected, beating analyst predictions by 10%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

After the latest results, the eleven analysts covering Allegion are now predicting revenues of US$3.92b in 2025. If met, this would reflect a modest 5.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 10% to US$7.26. In the lead-up to this report, the analysts had been modelling revenues of US$3.92b and earnings per share (EPS) of US$7.24 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$146, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Allegion, with the most bullish analyst valuing it at US$163 and the most bearish at US$110 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Allegion's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.1% growth on an annualised basis. This is compared to a historical growth rate of 7.2% over the past five years. Compare this to the 48 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.5% per year. Factoring in the forecast slowdown in growth, it looks like Allegion is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Allegion going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Allegion that we have uncovered.

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