One-glance verdict
Undervalued
$21.81 our estimate vs market $17.36
Wall Street consensus: $21.74 (-0.3% lower than our fair-value estimate)
20% below our estimate, below the bear case
Fundamentals snapshot
ASSA ABLOY AB (publ)
ASAZY · PNK · Industrials · Security & Protection Services
Current price
$17.36
52-week range
$16.71 - $21.98
Market cap
$38.57B
Balance sheet
Watch
7.12x Adequate
Net cash $0.00. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 1.5% last year.
- Reward Returns 15.6% on equity, ahead of 60% of its peers.
- Risk Stock trades 913.9% above its 5-year average P/E.
- Risk Net debt grew 110.9% over 3 years.
What this company does
ASSA ABLOY AB (publ)
ASSA ABLOY is a global company that makes and sells locks, automatic doors, and other security products for buildings, including well-known brands like Yale and Kwikset. It earns money by selling these essential items to a wide range of customers, from homeowners to large businesses like hospitals, schools, and airports. This matters because security is a constant need, providing the company with business from both new building construction and the continuous upgrading of locks and doors in existing properties.
How the company got here
ASSA ABLOY was created in 1994 when a Swedish company named ASSA (started by August Stenman) merged with a Finnish lock maker named Abloy (known for a unique rotating disc cylinder lock). From that point on, the company grew rapidly by buying other companies, completing hundreds of acquisitions to become a global leader in locks and doors. Major turning points included buying well-known brands like Yale, the electronic identity company HID, and the company that makes Kwikset and Baldwin locks, which significantly expanded its presence in homes, especially in North America.
What it actually does
You have almost certainly used an ASSA ABLOY product without knowing it. The company makes all kinds of ways to get into, out of, and around buildings, which they call "access solutions." This includes everything from the traditional Yale or Kwikset locks on your house, to the key card scanner you might use at the office, the automatic sliding doors at the grocery store, and even the high-tech systems that verify identities at passport control. They provide security for homes, hotels, hospitals, airports, and businesses all over the world.
EMEIA
This is one of the company's three regional divisions, covering Europe, the Middle East, India, and Africa. It sells a wide range of products, from mechanical locks and security doors to more advanced electronic and electromechanical locks (locks that have both mechanical and electronic parts). This division focuses on tailoring its products to local safety standards and customer needs, using well-known local brands like ABLOY, TESA, and Yale. It's a very large part of the company's business, selling to builders and through distributors in this diverse geographic area.
Americas
Similar to EMEIA, this division handles business in North and South America. It manufactures and sells mechanical and electromechanical locks, security doors, and door frames. This is the part of the company that sells many of the brands a U.S. homeowner would recognize, such as Kwikset, Baldwin, Sargent, and Yale. A significant portion of its sales comes from the residential market (locks for houses and apartments) as well as commercial buildings like offices and schools.
Asia Pacific
This division serves the markets in Asia and Oceania, selling mechanical locks, high-security doors, and a growing number of digital door locks. It uses brands that are leaders in their local markets, such as Lockwood in Australia and Guli and Pan Pan in China. This segment is focused on both mature markets and emerging markets (countries with growing economies), where new construction provides a large opportunity for growth.
Global Technologies
This part of the company is less about traditional locks and more about high-tech security. It's a global business that provides electronic solutions for controlling access and verifying identity. For example, its brand HID makes the key cards and readers many people use to get into their office buildings, as well as technology used in electronic passports. This is a key growth area for the company as it moves beyond just physical keys.
Entrance Systems
This division focuses on automatic doors and gates. Think of the sliding doors at a hospital or airport, revolving doors on an office building, or the automated gates and loading dock equipment at a warehouse. This business sells complete entrance systems and also makes money from service and maintenance contracts (agreements to keep the equipment running smoothly). It's a global business that helps manage the efficient flow of people and goods into and out of buildings.
What management is betting on now
The company's main focus is leading the shift from old-fashioned mechanical locks to smarter, electronic access solutions. They are investing in things like mobile access (using your phone as a key) and other digital technologies that offer more security and convenience. Management also continues to grow the company by acquiring other businesses, a strategy that has been core to its success since the beginning. Finally, they are focused on cost-efficiency (finding ways to run the business for less money) to ensure the company remains profitable.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $21.81 vs current price $17.36
Wall Street consensus is the average analyst price target: $21.74 (-0.3% lower than our fair-value estimate).
Our most-likely fair value is $21.81 a share — about 25.7% above today's price of $17.36, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net cash $0 - more cash than debt. Interest coverage 7.1x.
Net debt
$0.00
Interest coverage
7.12x
ASSA ABLOY AB (publ)'s profit covers its interest bill about 7.1 times over. which is stronger than most peers shown here.
Watch
Worse cushion
Baseline
Better cushion
ASAZY
BASELINE
ASSA ABLOY AB (publ)
Total debt — Interest coverage 7.12x This is the baseline the peer rows are being compared against.
Total debt $2.22B Interest coverage 8.51x +20% vs ASAZY Carries about 1.2x more debt cushion than ASAZY.
Total debt $2.80B Interest coverage 5.39x -24% vs ASAZY Carries about 1.3x less debt cushion than ASAZY.
Total debt $9.48B Interest coverage 12.46x +75% vs ASAZY Carries about 1.8x more debt cushion than ASAZY.
Total debt $3.90B Interest coverage 4.75x -33% vs ASAZY Carries about 1.5x less debt cushion than ASAZY.
What you should know
The case for and against ASAZY
3 Rewards
3 Risks
Rewards
-
Revenue grew 1.5% last year.
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Returns 15.6% on equity, ahead of 60% of its peers.
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Free cash flow was positive in 4/10 years.
Risks
-
Stock trades 913.9% above its 5-year average P/E.
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Net debt grew 110.9% over 3 years.
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Operating margin compressed from 15.8% to 0.0% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
23.15x
Forward P/E
19.34x
P/B
0.19x
P/S
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EV/EBITDA
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PEG ratio
1.47x
Profitability
How much profit each dollar creates
Gross margin
43.1%
Operating margin
0.0%
Net margin
10.8%
ROE
15.6%
ROA
7.1%
Health
Liquidity and balance-sheet strength
Debt / equity
0.64x
Current ratio
1.01x
Quick ratio
0.63x
Total debt
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Total cash
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Growth
How the business has been compounding
Revenue TTM
$15.47B
Revenue 5Y CAGR
8.1%
EPS TTM
0.75
EPS 5Y CAGR
3.4%
Cash flow
How much cash the business throws off
Operating CF TTM
$2.17B
Free CF TTM
$1.89B
FCF margin
12.2%
Dividend
Shareholder payout
Yield
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Payout ratio
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Last ex-div date
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