Allegion (ALLE) Misses Earnings & Revenues, Ups EPS View

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Allegion plc'sALLE third-quarter 2016 adjusted earnings came in at 93 cents per share, missing the Zacks Consensus Estimate of 95 cents by 2.1%. Meanwhile, earnings were slightly up from the adjusted EPS figure of 92 cents in the prior-year quarter.

Quarterly net revenue of $581.1 million missed the consensus mark of $586.85 million by 0.97% .The figures, however, increased 6.7% on a year-over-year basis.

Reported revenues reflect organic growth and synergies from acquisitions, partially offset by divestitures and adverse foreign currency translation. All regions reported organic growth reflecting stable markets, investments in new products and channel strategies. Organic revenues increased 5% year over year.

The company's adjusted effective tax rate for the third quarter of 2016 was 18.4%, compared with 15.1% in 2015 owing to the favorable resolution to uncertain tax positions in 2015, partially offset by favorable changes in the mix of income earned in lower tax rate jurisdictions.

ALLEGION PLC Price, Consensus and EPS Surprise

ALLEGION PLC Price, Consensus and EPS Surprise | ALLEGION PLC Quote

Segment Details

Revenues at the Americas segment rose 4.1% year over year while Organic revenues increased 5.6%. Segmental revenues were driven by continued growth in nonresidential markets, offsetting the impact of the divestiture of the Venezuelan business in 2015.

The EMEIA (Europe, Middle East, India and Africa) segment was up 27.2%, owing to acquisitions and improved pricing that offset unfavorable foreign currency. Acquisitions contributed approximately $25 million to revenues in the quarter. Organic revenues increased 1.6%.

Revenues at the Asia-Pacific segment were down 16.4% year over year. Organically, revenues improved 7.3%. Excluding the divesture of the system integration business from prior-year results, organic growth was 10.6% on strong performance in Australia and New Zealand.


Adjusted operating margin was 21.8%, up 30 basis points (bps) year over year, courtesy of favorable pricing, material deflation, product mix, volume leverage and productivity that more than offset increased investments and inflation.


Allegion ended the quarter with cash and cash equivalents of $214.5 million, as of Sep 30, 2016, compared with $199.7 million as of Dec 31, 2015.

The company generated $178.4 million in cash from operating activities in the first nine months of 2016 compared with $125.5 million in the year-ago period. Available cash flow was $152 million, an increase of $53.3 million versus the prior year. Capital expenditures totaled $26.4 million in the nine months ended Sep 30, 2016, compared with $27.3 million for the same period in 2015.

2016 Guidance

The company reaffirmed its 2016 full-year revenue guidance and updated full-year EPS outlook.

The company expects adjusted earnings per share in the range of $3.38 to $3.43, higher than the prior expectation of $3.30 to $3.40.

Allegion maintained its revenue growth projection at 8% to 9%.

Full-year organic revenues (excluding currency and acquisitions) are likely to increase 5% to 6%, in line with prior expectations.

The company currently carries a Zacks Rank #2 (Buy).

Other Key Picks

Other favorably ranked stocks in the industry include Brady Corp. BRC , Johnson Controls International plc JCI and Lakeland Industries Inc. LAKE . All the three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Brady Corp is expected to witness a 6.2% rise in fiscal 2017 earnings.

Johnson Controls is likely to see a 68.14% improvement in fiscal 2016 earnings.

Lakeland's fiscal 2017 earnings are expected to decline 47.71%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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