ALLE - Embedded Expectations Analysis - 2021 09 01
Allegion plc (ALLE:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 27.1x Uniform P/E, implying bullish expectations for the firm. However, management may have concerns about e-commerce growth, continued supply constraints, and strategic partnership opportunities.Specifically, management may lack confidence in their ability to continue making investments in a fast-changing and broader ecosystem and they may have concerns about supply chain constraints for electronic components. Moreover, they may lack confidence in their ability to build strategic relationships and sustain e-commerce revenue growth. Finally, they may be overstating the smart home connectivity capabilities of their Matter Work Group partnership and the potential of their Application Programming Interfaces (APIs) and open Software Development Kits (SDKs).
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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