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Allegion (ALLE) Earnings & Revenues Surpass Estimates in Q3
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Allegion plc (ALLE - Free Report) has reported better-than-expected results for third-quarter 2020, wherein both adjusted earnings and revenues surpassed the Zacks Consensus Estimate.
Earnings Rise, Revenues Decline
Quarterly adjusted earnings were $1.67 per share, beating the Zacks Consensus Estimate of $1.20. Notably, the bottom line was 13.6% higher than the year-ago figure of $1.47. The improvement was driven by lower operating expenses.
Revenues totaled $728.4 million, down 2.7% year over year. However, the top line beat the consensus estimate of $664 million. Revenues fell 3.4% on an organic basis. The top-line performance was adversely impacted by the coronavirus outbreak-related issues.
Revenues in the Americas fell 5.1% year over year to $539.1 million, owing to softness in non-residential and electronics businesses.
EMEIA (Europe, Middle East, India and Africa) revenues grew 7.7% to $148.4 million on higher sales volume, partially offset by adverse impacts of divestitures.
Revenues in the Asia Pacific fell 4.2% to $40.9 million in the quarter, reflecting weak end markets in Korea, partially offset by positive market conditions in Australia.
Costs & Margins Details
In the third quarter, Allegion’s cost of sales decreased 0.9% year over year to $409.2 million. Gross profit fell 4.9% to $319.2 million, while gross margin contracted 100 basis points (bps) to 43.8%.
Selling and administrative expenses decreased 6.7% year over year to $156.2 million.
Adjusted operating margin expanded 20 bps to 23.3%.
Balance Sheet & Cash Flow
As of Sep 30, 2020, Allegion had cash and cash equivalents of $428.9 million, up from $355.3 recorded on Dec 31, 2019. Long-term debt was $1,428.9 million, up from $1,427.6 million recorded at the end of 2019.
In the first nine months of 2020, the company generated net cash of $289.4 million from operating activities compared with $279.4 million in the year-ago comparable period. Capital expenditure totaled $33.3 million compared with $49.4 million in the year-ago period.
2020 Guidance
Allegion provided its financial outlook for 2020.
Adjusted earnings per share are expected to be $4.75 to $4.80 compared with $4.15-$4.30 guided earlier.
The company expects 2020 revenues to decline 6-6.5% on both reported and organic basis.
Adjusted effective tax rate is anticipated to be approximately 13% for the year.
Available cash flow is expected to be $400-$420 million.
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
ABB delivered a positive earnings surprise of 100.00% in the last reported quarter.
Altra Industrial delivered a positive earnings surprise of 31.43%, on average, in the trailing four quarters.
Fortune Brands delivered a positive earnings surprise of 19.44%, on average, in the trailing four quarters.
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Allegion (ALLE) Earnings & Revenues Surpass Estimates in Q3
Allegion plc (ALLE - Free Report) has reported better-than-expected results for third-quarter 2020, wherein both adjusted earnings and revenues surpassed the Zacks Consensus Estimate.
Earnings Rise, Revenues Decline
Quarterly adjusted earnings were $1.67 per share, beating the Zacks Consensus Estimate of $1.20. Notably, the bottom line was 13.6% higher than the year-ago figure of $1.47. The improvement was driven by lower operating expenses.
Revenues totaled $728.4 million, down 2.7% year over year. However, the top line beat the consensus estimate of $664 million. Revenues fell 3.4% on an organic basis. The top-line performance was adversely impacted by the coronavirus outbreak-related issues.
Allegion PLC Price, Consensus and EPS Surprise
Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote
Segmental Breakup
Revenues in the Americas fell 5.1% year over year to $539.1 million, owing to softness in non-residential and electronics businesses.
EMEIA (Europe, Middle East, India and Africa) revenues grew 7.7% to $148.4 million on higher sales volume, partially offset by adverse impacts of divestitures.
Revenues in the Asia Pacific fell 4.2% to $40.9 million in the quarter, reflecting weak end markets in Korea, partially offset by positive market conditions in Australia.
Costs & Margins Details
In the third quarter, Allegion’s cost of sales decreased 0.9% year over year to $409.2 million. Gross profit fell 4.9% to $319.2 million, while gross margin contracted 100 basis points (bps) to 43.8%.
Selling and administrative expenses decreased 6.7% year over year to $156.2 million.
Adjusted operating margin expanded 20 bps to 23.3%.
Balance Sheet & Cash Flow
As of Sep 30, 2020, Allegion had cash and cash equivalents of $428.9 million, up from $355.3 recorded on Dec 31, 2019. Long-term debt was $1,428.9 million, up from $1,427.6 million recorded at the end of 2019.
In the first nine months of 2020, the company generated net cash of $289.4 million from operating activities compared with $279.4 million in the year-ago comparable period. Capital expenditure totaled $33.3 million compared with $49.4 million in the year-ago period.
2020 Guidance
Allegion provided its financial outlook for 2020.
Adjusted earnings per share are expected to be $4.75 to $4.80 compared with $4.15-$4.30 guided earlier.
The company expects 2020 revenues to decline 6-6.5% on both reported and organic basis.
Adjusted effective tax rate is anticipated to be approximately 13% for the year.
Available cash flow is expected to be $400-$420 million.
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the Zacks Industrial Products sector are ABB Ltd , Altra Industrial Motion Corp. and Fortune Brands Home Security, Inc. , each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ABB delivered a positive earnings surprise of 100.00% in the last reported quarter.
Altra Industrial delivered a positive earnings surprise of 31.43%, on average, in the trailing four quarters.
Fortune Brands delivered a positive earnings surprise of 19.44%, on average, in the trailing four quarters.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>