Allegion (ALLE) At A 52-Week High: Can It Scale Higher?

On Jul 5, shares of Allegion plc (NYSE:ALLE) rallied to a new 52-week high of $82.90. The stock pulled back to end the trading session at $82.14.

The provider of security solutions has seen its shares rise roughly 28.3% so far this year, as compared with a 10.2% increase for the Protection-Safety Equipment & Services industry over the same period.

The stock has a market cap of $7.75 billion. Over the last one week, the Zacks Consensus Estimate for Allegion moved up 0.5% to $3.70 for 2017. Earnings for this Zacks Rank #2 (Buy) company are expected to grow 10.9% in 2017. We also note that the company displays long-term earnings growth rate of 13.7%, reinstating investor confidence in the stock.

What’s Driving Allegion?

Allegion's focus on innovation and string of acquisitions are encouraging.

Allegion is uniquely positioned to supply mechanical, electro-mechanical and electronic security solutions. The company’s focus on innovation has resulted in consistent revenue growth in electronics. Allegion is also trying to chalk out channel strategies and gain enterprise excellence to accelerate core market expansion.

Acquisitions is an important part of Allegion’s growth strategy.The security products industry is highly fragmented, particularly in the developing markets, and involves the use of emerging technology products that employ newer technologies. This creates numerous opportunities to broaden the product portfolio as well as geographic footprint and enhance the position in strategic market segments through buyouts. During the first quarter of 2017, acquisitions contributed 2% to revenues.

Notably, the company updated its 2017 earnings guidance which further adds to the optimism. Adjusted earnings per share are now projected in the range of $3.60–$3.70 versus the prior expectation of $3.55 to $3.70. The company expects full-year 2017 reported and organic revenues growth of 5.5% to 6.5% from 2016.

Other Key Picks

A few other top-ranked stocks in the industry are Lakeland Industries, Inc. (NASDAQ:LAKE) , Ituran Location and Control Ltd. (NASDAQ:ITRN) and MSA Safety Incorporporated (NYSE:MSA) .

Lakeland sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fiscal 2018 earnings for Lakeland are expected to increase 56.6%.

Ituran, a Zacks Rank #2 stock, is expected to witness 32.7% growth in 2017 earnings.

MSA Safety, also a Zacks Rank #2 stock, is expected to see a 17.5% rise in 2017 earnings.

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