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Allegion (ALLE) Q3 Earnings and Revenues Beat Estimates

Allegion plc 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.

Allegion PLC Price, Consensus and EPS Surprise

Allegion PLC Price, Consensus and EPS Surprise

Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote

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 CMPR, Brady Corporation BRC and Dover Corporation 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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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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