Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Allegion plc's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.2% to 9.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 42, DPO 48, DIO 82). At a 8.5% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $210.61 per share, suggesting ALLE is undervalued by 44.3% at the current price of $145.93.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 689 | 720 | 745 | 807 | 881 | 903 |
| (−) Net Interest | 102 | 107 | 110 | 119 | 130 | 134 |
| (+) D&A | 77 | 86 | 93 | 96 | 99 | 101 |
| EBITDA | 868 | 913 | 948 | 1,022 | 1,110 | 1,138 |
| (−) Tax | 85 | 89 | 92 | 100 | 109 | — |
| (−) CapEx | 92 | 97 | 100 | 108 | 118 | — |
| (−) ΔWC | -16 | 33 | 26 | 65 | 78 | — |
| Free Cash Flow (FCF) | 706 | 695 | 730 | 749 | 805 | — |
| Peers' EBITDA Multiple | 22.6x | |||||
| Terminal Value | 25,769 | |||||
| WACC / Discount Rate | 8.50% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 678 | 615 | 595 | 563 | 558 | 17,134 |
| Enterprise Value | 20,143 | |||||
| Projection Period | 3,009 | 14.9% | ||||
| Terminal Value | 17,134 | 85.1% | ||||
| (−) Current Net Debt | 1,923 | |||||
| Equity Value | 18,220 | |||||
| (÷) Outstanding Shares | 87M | |||||
| Fair Price | $211 | +44.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.6x | 20.6x | 22.6x | 24.6x | 26.6x |
|---|---|---|---|---|---|
| 6.5% | $193 | $212 | $232 | $251 | $270 |
| 7.5% | $184 | $202 | $221 | $239 | $257 |
| 8.5% | $176 | $193 | $211 | $228 | $246 |
| 9.5% | $168 | $184 | $201 | $218 | $234 |
| 10.5% | $160 | $176 | $192 | $208 | $224 |
Current price: $145.93. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.