2014 | 2015 | ||||||
Price: | 52.00 | EPS | $2.97 | $3.59 | |||
Shares Out. (in M): | 96 | P/E | 17.5x | 14.5x | |||
Market Cap (in $M): | 5,017 | P/FCF | 20.0x | 17.0x | |||
Net Debt (in $M): | 1,095 | EBIT | 361 | 439 | |||
TEV ($): | 6,112 | TEV/EBIT | 16.9x | 13.9x |
Company Overview:
I recommend a long investment in Allegion (NYSE: ALLE). Allegion is a leading global provider of mechanical and electronic security products that include key systems, exit devices, and other access control solutions. The business was part of Ingersoll Rand, before being spun-off in late 2013. The company generated $2.1B of revenue in 2013, with the majority of its exposure coming from US non-residential end-markets where it is the #2 player behind Assa Abloy. ~53% of revenue is estimated to come from remodels and rebuilds with the remainder form new construction. The Company also skews towards non-resi construction with ~half of total sales coming from North American non-residential construction, ~31% from RoW non-resi construction and the remainder from (mostly American) resi construction. The Company is in a position with alot of levers to pull to help improve margins and lead to signficant earnings growth.
Business Description:
($US M) | 2011 | 2012 | 2013 | 2014E | 2015E | 2016E | 2017E |
Revenue | $2,021 | $2,047 | $2,094 | $2,118 | $2,308 | $2,602 | $2,881 |
Growth | 1.3% | 2.3% | 1.2% | 9.0% | 12.7% | 10.7% | |
EBITDA | $405 | $421 | $409 | $429 | $491 | $565 | $628 |
Margin | 20.1% | 20.6% | 19.6% | 20.3% | 21.3% | 21.7% | 21.8% |
EV/EBITDA | 15.1x | 14.5x | 14.9x | 14.3x | 12.4x | 10.8x | 9.7x |
EPS | $2.13 | $2.24 | $2.97 | $3.59 | $4.12 | ||
P/E | 24.4x | 23.2x | 17.5x | 14.5x | 12.6x | ||
FCF | $240 | $250 | $204 | $193 | $259 | $307 | $358 |
FCF Yield | 4.1% | 3.9% | 5.2% | 6.1% | 7.1% |
Variant Perception:
Risk/Reward:
Pre-mortem:
Mgmt: