Security hardware provider Allegion (NYSE: ALLE) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 9.3% year on year to $1.03 billion. Its non-GAAP profit of $1.94 per share was 2% below analysts’ consensus estimates.

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“I'm proud of the Allegion team as we delivered on our commitments to customers and shareholders, finishing out a strong 2025 marked by high-single digit enterprise revenue growth, accretive capital deployment and strong cash generation,” Allegion President and CEO John H. Stone said.

Company Overview

Allegion plc (NYSE: ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Allegion’s sales grew at a decent 8.4% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Allegion’s recent performance shows its demand has slowed as its annualized revenue growth of 5.6% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Allegion’s organic revenue averaged 3.1% year-on-year growth. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Allegion grew its revenue by 9.3% year on year, and its $1.03 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and suggests its newer products and services will not lead to better top-line performance yet.

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Operating Margin

Allegion has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 19.7%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Allegion’s operating margin rose by 2.6 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q4, Allegion generated an operating margin profit margin of 20.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Allegion’s decent 9.7% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Allegion’s two-year annual EPS growth of 8.1% was decent and topped its 5.6% two-year revenue growth.

Diving into the nuances of Allegion’s earnings can give us a better understanding of its performance. While we mentioned earlier that Allegion’s operating margin was flat this quarter, a two-year view shows its margin has expandedwhile its share count has shrunk 1.8%. Improving profitability and share buybacks are positive signs for shareholders as they juice EPS growth relative to revenue growth.

In Q4, Allegion reported adjusted EPS of $1.94, up from $1.86 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Allegion’s full-year EPS of $8.14 to grow 8.1%.

Key Takeaways from Allegion’s Q4 Results

We struggled to find many positives in these results. Its EBITDA missed and its EPS fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 4.2% to $172.00 immediately following the results.

Allegion’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).