AZZ (NYSE:AZZ) versus Allegion (NYSE:ALLE) Critical Survey

Allegion (NYSE:ALLE) and AZZ (NYSE:AZZ) are both industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, institutional ownership, valuation, earnings and analyst recommendations.

Analyst Ratings

This is a breakdown of current recommendations for Allegion and AZZ, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allegion	0	6	3	0	2.33
AZZ	0	3	4	0	2.57

Allegion currently has a consensus target price of $162.50, indicating a potential upside of 4.49%. AZZ has a consensus target price of $153.20, indicating a potential upside of 17.37%. Given AZZ’s stronger consensus rating and higher probable upside, analysts plainly believe AZZ is more favorable than Allegion.

Dividends

Allegion pays an annual dividend of $2.20 per share and has a dividend yield of 1.4%. AZZ pays an annual dividend of $0.96 per share and has a dividend yield of 0.7%. Allegion pays out 28.9% of its earnings in the form of a dividend. AZZ pays out 17.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Allegion has increased its dividend for 11 consecutive years. Allegion is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

92.2% of Allegion shares are owned by institutional investors. Comparatively, 90.9% of AZZ shares are owned by institutional investors. 0.6% of Allegion shares are owned by company insiders. Comparatively, 1.7% of AZZ shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Allegion and AZZ”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allegion	$4.07 billion	3.25	$643.80 million	$7.62	20.41
AZZ	$1.65 billion	2.37	$317.26 million	$5.55	23.52

Allegion has higher revenue and earnings than AZZ. Allegion is trading at a lower price-to-earnings ratio than AZZ, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Allegion has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500. Comparatively, AZZ has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Profitability

This table compares Allegion and AZZ’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allegion	15.36%	35.41%	13.80%
AZZ	9.59%	14.85%	8.96%

Summary

Allegion beats AZZ on 10 of the 17 factors compared between the two stocks.

About Allegion

Allegion plc manufactures and sells mechanical and electronic security products and solutions worldwide. The company offers door controls and systems and exit devices; locks, locksets, portable locks, and key systems and services; electronic security products and access control systems; time, attendance, and workforce productivity systems; doors, accessories, and other. It also provides services and software, which includes inspection, maintenance, and repair services for its automatic entrance solutions; and software as a service, including access control, IoT integration, and workforce management solutions, as well as aftermarket services, design and installation offerings, and locksmith services. The company sells its products and solutions to end-users in commercial, institutional, and residential facilities, including education, healthcare, government, hospitality, retail, commercial office, and single and multi-family residential markets under the CISA, Interflex, LCN, Schlage, SimonsVoss, and Von Duprin brands. It sells its products and solutions through distribution and retail channels, such as specialty distribution, e-commerce, and wholesalers, as well as through various retail channels comprising do-it-yourself home improvement centers, online and e-commerce platforms, and small specialty showroom outlets. Allegion plc was incorporated in 2013 and is headquartered in Dublin, Ireland.

About AZZ

AZZ Inc. provides hot-dip galvanizing and coil coating solutions in North America. It offers metal finishing solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing, and plating to steel fabrication and other industries, as well as to fabricators or manufacturers that provide services to the transmission and distribution, bridge and highway, petrochemical, and general industrial markets; and original equipment manufacturers. It also provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation, and air conditioning; container; transportation; and other end markets. The company was incorporated in 1956 and is headquartered in Fort Worth, Texas.