Allegion (ALLE) Shows Signs Of Being Water-Logged And Getting Wetter - TheStreet

Trade-Ideas LLC identified

Allegion

(

ALLE

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Allegion as such a stock due to the following factors:

  • ALLE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.2 million.
  • ALLE has traded 450,124 shares today.
  • ALLE traded in a range 279.5% of the normal price range with a price range of $3.90.
  • ALLE traded below its daily resistance level (quality: 2 days, meaning that the stock is crossing a resistance level set by the last 2 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ALLE:

Allegion Public Limited Company manufactures and sells mechanical and electronic security products and solutions worldwide. The stock currently has a dividend yield of 0.6%. ALLE has a PE ratio of 3. Currently there are 5 analysts that rate Allegion a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Allegion has been 567,200 shares per day over the past 30 days. Allegion has a market cap of $6.2 billion and is part of the services sector and diversified services industry. Shares are up 17.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Allegion as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • Compared to other companies in the Building Products industry and the overall market, ALLEGION PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 45.81% is the gross profit margin for ALLEGION PLC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.30% is above that of the industry average.
  • ALLE, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The debt-to-equity ratio is very high at 26.48 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ALLE maintains a poor quick ratio of 0.99, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has significantly decreased to $28.80 million or 55.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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