Report Date: Thursday, July 23, 2026, before market open | Call: 8:00 AM ET
| Consensus Q2'26 Adj. EPS | ~$2.21–$2.23 (vs. $2.04 in Q2'25, +~9% y/y) |
| Consensus Q2'26 Revenue | ~$1.12 billion (vs. $1.022B in Q2'25, +~9% y/y reported) |
| FY2026 Guidance (affirmed at Q1) | Adj. EPS $8.70–$8.90; organic revenue growth 2–4%; reported revenue growth 6–8% |
| Stock, YTD | Down roughly 13% (from ~$161 at year-end 2025 to ~$140 currently), after peaking near $180 in early February |
| Last quarter's reaction | Stock fell ~8% the day Q1 results were released, on an adjusted EPS miss |
Allegion's Q1 2026 print set up an unusually messy start to the year. Headline revenue growth looked strong — net revenues of $1,033.6 million, up 9.7% reported and 2.6% organic — but adjusted EPS of $1.80 was down 3.2% year-over-year and missed Street estimates, sending shares down nearly 8% on the print. Two issues drove the miss:
Management also flagged an incremental ~1% of COGS headwind from tariffs and other inflation, which it does not plan to fully price for yet (similar to its approach a year ago), but expects to offset dollar-for-dollar through pricing and cost actions, calling it neutral to full-year adjusted operating income and EPS.
Despite the miss, Allegion raised its reported revenue outlook to 6–8% (to reflect the March acquisition of DCI, a West Coast door/frame manufacturer) while affirming organic growth guidance of 2–4% and adjusted EPS of $8.70–$8.90.
1. International — did the ERP recovery show up yet? This is the single biggest swing factor for the quarter. Management said Q2 margin performance in International would still be "a little softer" year-over-year, similar to Q1's sequential pattern in 2025, with more meaningful recovery expected in the back half. Investors will want confirmation that backlog is converting to shipments and that the mechanical business production rates are normalizing, rather than seeing further slippage.
2. Americas margin trajectory. Management guided that Americas margins would not show much expansion in Q2 (a tough comp against last year's Mexican peso FX benefit), with the real margin inflection expected in Q3/Q4. Watch for confirmation that the negative product mix seen in Q1 (not a "trade-down," per CFO Mike Wagnes, but a mix shift within the non-residential portfolio) has stabilized as guided.
3. Non-residential demand/spec activity. Management characterized spec activity as "very strong" and broad-based heading into Q2, with channel checks supporting the outlook and no signs of elongated spec-to-order timelines or data-center project crowding out other verticals. A sustained read-through here is the key support for the 2–4% organic growth guide.
4. Electronics growth cadence. Electronics growth decelerated to mid-single digits in Q1 from low-double-digit growth in Q4 2025, largely a tough comp issue. Management continues to frame electronics as a long-term structural growth driver and expects it to outgrow the mechanical portfolio again in 2026 — worth confirming reacceleration here.
5. Tariff/inflation pass-through. With the ~1% COGS headwind flagged in April, watch for updates on pricing actions (surcharges/list price increases) now being implemented in the market, and whether the neutral-to-EPS mitigation framework is still intact given ongoing Section 232/trade-policy volatility.
6. Capital deployment. Allegion repurchased $40 million of shares in Q1 and its board authorized a new $500 million buyback program in April. Management indicated an active bolt-on M&A pipeline alongside continued repurchases — expect updates on the pace of both, plus early commentary on DCI's integration (management noted DCI carries a low-double-digit EBITDA margin today, meaning limited near-term EPS accretion but longer-term strategic/cost benefits on the West Coast).
Shares are down roughly 13% year-to-date and have essentially round-tripped a sharp post-Q1 selloff (falling into the mid-$120s in May before recovering into the high-$130s/low-$140s over the past two months). Sell-side sentiment has stayed constructive despite the guidance cut in perception (13 analysts, a "Moderate Buy" consensus skewing toward Hold, average price target near $162 — implying meaningful upside from current levels near $140), suggesting the market has largely priced in the ERP/margin bumps as transitory rather than structural. Analysts have generally left estimates unchanged over the past month heading into the print, signaling limited pre-earnings repositioning.
This quarter is largely a credibility check on management's Q1 promise that the International ERP shortfall and Americas mix pressure were temporary and would resolve through the year rather than persist. A "clean" quarter — Americas margins roughly flat-to-slightly-down as guided, visible sequential improvement in International, continued strong Americas non-residential organic growth, and reaffirmed full-year guidance — would likely be viewed as a relief after the Q1 stumble. Conversely, any signs that the ERP recovery is slipping further, that tariff/inflation costs are outrunning pricing actions, or that electronics growth is structurally slowing (rather than facing tough comps) would raise concerns about the durability of the $8.70–$8.90 full-year EPS guide and could pressure the stock further. Capital allocation (buyback pace, M&A pipeline commentary) remains a secondary but relevant offset, given the new $500 million repurchase authorization.