Allegion (NYSE:ALLE – Get Free Report) and Lennox International (NYSE:LII – Get Free Report) are both large-cap industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.
Insider & Institutional Ownership
92.2% of Allegion shares are owned by institutional investors. Comparatively, 67.1% of Lennox International shares are owned by institutional investors. 0.6% of Allegion shares are owned by company insiders. Comparatively, 9.8% of Lennox International shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Dividends
Allegion pays an annual dividend of $2.20 per share and has a dividend yield of 1.2%. Lennox International pays an annual dividend of $5.44 per share and has a dividend yield of 1.4%. Allegion pays out 27.4% of its earnings in the form of a dividend. Lennox International pays out 24.6% 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 and Lennox International has increased its dividend for 16 consecutive years. Lennox International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Allegion has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Lennox International has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500.
Analyst Ratings
This is a breakdown of current recommendations and price targets for Allegion and Lennox International, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Allegion | 0 | 4 | 4 | 0 | 2.50 |
| Lennox International | 2 | 10 | 4 | 0 | 2.12 |
Allegion currently has a consensus target price of $173.56, suggesting a potential downside of 3.02%. Lennox International has a consensus target price of $483.46, suggesting a potential upside of 28.62%. Given Lennox International’s higher probable upside, analysts clearly believe Lennox International is more favorable than Allegion.
Profitability
This table compares Allegion and Lennox International’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Allegion | 15.74% | 35.52% | 14.06% |
| Lennox International | 14.61% | 66.42% | 19.16% |
Valuation and Earnings
This table compares Allegion and Lennox International”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Allegion | $4.07 billion | 3.74 | $643.80 million | $8.03 | 22.29 |
| Lennox International | $5.20 billion | 2.50 | $805.80 million | $22.12 | 16.99 |
Lennox International has higher revenue and earnings than Allegion. Lennox International is trading at a lower price-to-earnings ratio than Allegion, indicating that it is currently the more affordable of the two stocks.
Summary
Lennox International beats Allegion on 11 of the 16 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 Lennox International
Lennox International Inc., together with its subsidiaries, designs, manufactures, and markets a range of products for the heating, ventilation, air conditioning, and refrigeration markets in the United States, Canada, and internationally. The Home Comfort Solutions segment provides furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, and replacement parts and supplies; residential heating, ventilation, cooling equipment, and air conditioning; and evaporator coils and unit heaters under Lennox, Dave Lennox Signature Collection, Armstrong Air, Ducane, AirEase, Concord, MagicPak, Advanced Distributor Products, Allied, Elite Series, Merit Series, Comfort Sync, Healthy Climate, iComfort, ComfortSense, and Lennox Stores name. The Building Climate Solutions segment offers unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, variable refrigerant flow commercial, curb, curb adapters, drop box diffusers, HVAC recycling, and salvage service. This segment also provides condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, and refrigeration rack systems for preserving food and other perishables; and compressor racks and industrial process chillers under the Lennox, Model L, CORE, Enlight, Xion, Energence, Prodigy, Strategos, Raider, Lennox VRF, Lennox National Account Services, Allied Commercial, Elite, AES Industries, Mechanical, and Reclaim, Heatcraft Worldwide and Chandler Refrigeration, Bohn, MAGNA, Larkin, FriguaBohn, IntelliGen, and Interlink brand name. In addition, the company provides small package units, rooftop units, chillers, air handlers, and fan coils. It sells its products and services through direct sales, distributors, and company-owned parts and supplies stores. The company was founded in 1895 and is headquartered in Richardson, Texas.
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