Allegion (ALLE) Q3 Earnings And Revenues Beat Estimates

Allegion plc (NYSE:ALLE) reported better-than-expected results for third-quarter 2019, wherein both adjusted earnings and revenues beat the Zacks Consensus Estimate.

Earnings/Revenues

Quarterly adjusted earnings came in at $1.47 per share, surpassing the Zacks Consensus Estimate of $1.33. Moreover, the bottom line was 19.5% higher than the year-ago figure. The upside can be primarily attributed to solid sales growth and improved operating income.

Revenues came in at $748.3 million, up 5.2% year over year. In addition, the top line beat the consensus estimate of $739 million. Revenues jumped 6.4% on an organic basis. The rise was backed by strength in Americas non-residential and residential businesses and strong pricing benefits, partially offset by adverse impact of unfavorable foreign exchange movements.

Revenues in the Americas rose 7.1% year over year to $567.8 million. EMEIA (Europe, Middle East, India and Africa) revenues increased 2.5% to $137.8 million. Revenues in Asia-Pacific fell 9.1% to $42.7 million in the reported quarter.

Costs/Margins

In the third quarter, Allegion’s cost of sales jumped 2.7% year over year to $412.8 million. Gross profit grew 8.4% to $335.5 million while gross margin improved 130 basis points (bps) to 44.8%.

Selling and administrative expenses increased 0.2% year over year to $167.4 million.

Adjusted operating margin expanded 220 bps to 23.1%.

Balance Sheet/Cash Flow

As of Sep 30, 2019, Allegion had cash and cash equivalents of $232.9 million, down from $283.8 recorded on Dec 31, 2018. Long-term debt was $1,427 million, up from $1,409.5 million recorded at the end of 2018.

In the first nine months of 2019, the company generated net cash of $279.4 million from operating activities, up 7.3% from the year-ago period. Capital expenditures totaled $49.4 million compared with $31.8 million a year ago.
2019 Guidance

Adjusted earnings per share are now expected in the range of $4.85 to $4.90 compared with $4.80-$4.90 guided earlier.

The company expects full-year 2019 revenue growth on both reported and organic basis in the band of 4.5-5.5%.

Full-year adjusted effective tax rate is anticipated to be 15.5%.

Available cash flow is targeted to be approximately $410-$430 million.

Zacks Rank & Key Picks

Allegion currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Cimpress N.V (NASDAQ:CMPR) , Brady Corporation (NYSE:BRC) and Dover Corporation (NYSE:DOV) . While Cimpress sports a Zacks Rank #1 (Strong Buy), Brady and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cimpress’ earnings surprise in the last reported quarter was a positive 137.04%.

Brady delivered average positive earnings surprise of 9.68% in the trailing four quarters.

Dover pulled off average positive earnings surprise of 6.70% in the trailing four quarters.

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