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Allegion (ALLE) Up 1.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Allegion (ALLE - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Allegion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Allegion Q2 Earnings Top Estimates, Revenues Up Y/Y
Allegion’s second-quarter 2024 adjusted earnings of $1.96 per share beat the Zacks Consensus Estimate of $1.77. The bottom line increased 11.4% year over year.
Revenue Details
Allegion’s revenues were $965.6 million, which increased 5.8% year over year. Organic revenues increased 5.2% driven by price realization and volume growth. The company’s revenues beat the Zacks Consensus Estimate of $944 million.
Acquired assets boosted revenues by 0.9%. Forex woes left a negative impact of 0.3% on revenues.
Allegion reports revenues under two segments. A brief discussion of quarterly results is provided below:
Revenues from Allegion Americas increased 6% year over year to $770.7 million. The figure accounted for 79.8% of the quarter’s revenues.
Operating income for the segment was $214.3 million, up 9.7% year over year. Our estimate was $226.0 million.
Revenues from Allegion International were $194.9 million, up 5.2% year over year. The metric accounted for 20.2% of the quarter’s revenues.
Segmental operating income was $17.7 million, up 27.3% year over year. Our estimate was $22.1 million.
Margin Profile
In the reported quarter, Allegion’s cost of revenues increased 5.2% year over year to $537.3 million. Gross profit was $428.3 million, up 6.6% year over year, while the gross margin jumped 40 basis points (bps) to 44.4%.
Selling and administrative expenses inched up approximately 1% year over year to $219.3 million. Adjusted EBITDA was $236.5 million, reflecting a year-over-year increase of 10.5%. The margin grew 130 bps year over year to 30.7%.
Adjusted operating income increased 12.8% year over year to $228.6 million. The adjusted margin was 23.7%, up 150 bps. Interest expenses were $25.1 million, up 5.9% year over year. The effective tax rate was 17.8%, up from 12.6% in the year-ago quarter.
Balance Sheet and Cash Flow
While exiting the second quarter, Allegion had cash and cash equivalents of $747.5 million compared with $468.1 million at the end of fourth-quarter 2023. Long-term debt was $2 billion compared with $1.6 billion at the end of fourth-quarter 2023.
In the first six months of 2024, Allegion generated net cash of $224.1 million from operating activities, reflecting a decrease of 2.6% year over year. Capital expenditure was $48.1 million, up 20.3% year over year. The available cash flow was $176 million.
Allegion repurchased shares for $80 million. Dividends paid out totaled $83.8 million, reflecting an increase of 5.7% year over year.
2024 Outlook Raised
Allegion now expects revenues to increase 2.5-3.5% from the year-ago levels compared with 1.5-3.5% increase anticipated earlier. The company anticipates organic revenues to grow in the range of 1.5-2.5%.
Management projects earnings of $6.50-$6.65 per share on a reported basis compared with the prior expected range of $6.45-$6.60. Adjusted earnings are projected to be in the range of $7.15-$7.30 per share compared with the prior expected range of $7.00-$7.15. The consensus estimate for earnings is pegged at $7.09 per share.
The company estimates available cash flow to be in the range of $540-$570 million. The adjusted effective tax rate is estimated in the 18-19% band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Allegion has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Allegion has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Allegion (ALLE) Up 1.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Allegion (ALLE - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Allegion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Allegion Q2 Earnings Top Estimates, Revenues Up Y/Y
Allegion’s second-quarter 2024 adjusted earnings of $1.96 per share beat the Zacks Consensus Estimate of $1.77. The bottom line increased 11.4% year over year.
Revenue Details
Allegion’s revenues were $965.6 million, which increased 5.8% year over year. Organic revenues increased 5.2% driven by price realization and volume growth. The company’s revenues beat the Zacks Consensus Estimate of $944 million.
Acquired assets boosted revenues by 0.9%. Forex woes left a negative impact of 0.3% on revenues.
Allegion reports revenues under two segments. A brief discussion of quarterly results is provided below:
Revenues from Allegion Americas increased 6% year over year to $770.7 million. The figure accounted for 79.8% of the quarter’s revenues.
Operating income for the segment was $214.3 million, up 9.7% year over year. Our estimate was $226.0 million.
Revenues from Allegion International were $194.9 million, up 5.2% year over year. The metric accounted for 20.2% of the quarter’s revenues.
Segmental operating income was $17.7 million, up 27.3% year over year. Our estimate was $22.1 million.
Margin Profile
In the reported quarter, Allegion’s cost of revenues increased 5.2% year over year to $537.3 million. Gross profit was $428.3 million, up 6.6% year over year, while the gross margin jumped 40 basis points (bps) to 44.4%.
Selling and administrative expenses inched up approximately 1% year over year to $219.3 million. Adjusted EBITDA was $236.5 million, reflecting a year-over-year increase of 10.5%. The margin grew 130 bps year over year to 30.7%.
Adjusted operating income increased 12.8% year over year to $228.6 million. The adjusted margin was 23.7%, up 150 bps. Interest expenses were $25.1 million, up 5.9% year over year. The effective tax rate was 17.8%, up from 12.6% in the year-ago quarter.
Balance Sheet and Cash Flow
While exiting the second quarter, Allegion had cash and cash equivalents of $747.5 million compared with $468.1 million at the end of fourth-quarter 2023. Long-term debt was $2 billion compared with $1.6 billion at the end of fourth-quarter 2023.
In the first six months of 2024, Allegion generated net cash of $224.1 million from operating activities, reflecting a decrease of 2.6% year over year. Capital expenditure was $48.1 million, up 20.3% year over year. The available cash flow was $176 million.
Allegion repurchased shares for $80 million. Dividends paid out totaled $83.8 million, reflecting an increase of 5.7% year over year.
2024 Outlook Raised
Allegion now expects revenues to increase 2.5-3.5% from the year-ago levels compared with 1.5-3.5% increase anticipated earlier. The company anticipates organic revenues to grow in the range of 1.5-2.5%.
Management projects earnings of $6.50-$6.65 per share on a reported basis compared with the prior expected range of $6.45-$6.60. Adjusted earnings are projected to be in the range of $7.15-$7.30 per share compared with the prior expected range of $7.00-$7.15. The consensus estimate for earnings is pegged at $7.09 per share.
The company estimates available cash flow to be in the range of $540-$570 million. The adjusted effective tax rate is estimated in the 18-19% band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Allegion has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Allegion has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.