Back to top

Image: Bigstock

Why Is Allegion (ALLE) Up 3% Since the Last Earnings Report?

Read MoreHide Full Article

More than a month has gone by since the last earnings report for Allegion PLC (ALLE - Free Report) . Shares have added about 3% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Third Quarter 2017 Results

Allegion’s third-quarter 2017 adjusted earnings came in at $1.02 per share, in line with the Zacks Consensus Estimate. Adjusted earnings were up 9.7% from the prior-year quarter.

Quarterly net revenues of $609.4 million missed the consensus mark of $618.8 million by 1.5%. The figure increased 4.9% on a year-over-year basis on the back of continued organic growth, synergies from acquisitions and favorable foreign currency impact. Revenues were also up 2.7% on an organic basis.

Segment Details

Revenues at the Americas segment rose 4.4% year over year to $455.2 million, primarily driven by favorable price and mid-teens growth in electronics, which offset the impact of timing of orders. Acquisitions and favorable foreign currency added to revenue growth. Organic revenues also increased 2.8% year over year.

The EMEIA (Europe, Middle East, India and Africa) segment was up 7.5% to $125.1 million, driven by robust pricing in the quarter and favorable currency impact. Organically, revenues were up 3.1% on a year-over-year basis.

Revenues at the Asia-Pacific segment rose 2.1% year over year to $29.1 million on the back of favorable price and currency impact. Organically, revenues were up 0.4%.

Margins

Adjusted operating margin was 22.1%, up 30 basis points (bps) year over year owing to solid price performance, volume leverage and productivity, which offset negative impacts from unfavorable product mix, increased investments and inflation. Adjusted EBITDA margin was down 20 bps to 31.6%.

Financials

Allegion ended the quarter with cash and cash equivalents of $334.9 million, as of Sep 30, 2017, compared with $312.4 million as of Dec 31, 2016.

Available cash flow, as of Sep 30, 2017, was $136.3 million, lower than $152 million in the third quarter of 2016, due to a discretionary pension funding payment of $50 million in the first quarter, partially offset by an increase in earnings.

Capital expenditures totaled $33.7 million in the first nine months of 2017, compared with $26.4 million a year ago.

2017 Guidance

Adjusted earnings per share are now expected in the range of $3.75 to $3.80 versus the prior expectation of $3.65-$3.80.

The company expects full-year 2017 revenue growth of 6.5% to 7% on a year-over-year basis, marginally lowered from what was expected earlier (6.5% to 7.5%).

Organically, revenues are expected in the 5% to 5.5% range, compared to 6% to 7% projected earlier.

Full-year adjusted effective tax rate is anticipated in the 18% to 18.5% range, slightly lower than the previously anticipated 18.5% to 19% range.

Available cash flow is targeted at approximately $300 million (including $50 million in discretionary pension funding payment.

How Have Estimates Been Moving Since Then?

Fresh estimate followed a flat path over the past two months.

Allegion PLC Price and Consensus

 

Allegion PLC Price and Consensus | Allegion PLC Quote

VGM Scores

At this time, Allegion's stock has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated also a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Allegion PLC (ALLE) - free report >>

Published in