Report by Abacus Research
High quality compounder at an attractive valuation - ALLE consistently generates the highest operating margins (>20%) and ROIC (20%) in a market where the top-3 players have ~80% of the US market. Abacus forecast 20% EPS growth from 2021-23 driven by improving margins, increasing penetration of electronic locks and a cyclical bounce in non-residential spending. Inflation fears are overstated and Abacus do not consider Latch to be a long-term threat. A valuation gap has also opened vs. Assa Abloy which is not justified by fundamentals. 12-month TP $181 (30% upside).