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Should You Add Allegion (ALLE) Stock to Your Portfolio Now?
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Shares of Allegion plc (ALLE - Free Report) have rallied 38% year to date, outperforming the 9.7% gain of the industry it belongs to. Also, the company has outperformed the industry in each of the 4-week, 12-week and 52-week time frames. Allegion's focus on innovation and string of acquisitions are encouraging.
Moreover, its earnings estimates for 2017 and 2018 have moved up 0.5% and 1.5%, respectively, over the last 30 days, reflecting analysts’ optimism. The company’s Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Let us delve deeper into the other factors that make this stock a lucrative pick.
Growth Strategies Solid
Acquisitions form an integral part of Allegion’s growth strategy. The security products industry is highly fragmented, particularly in developing markets, and involves the use of emerging technology products that employ newer technologies. This creates numerous opportunities to broaden the product portfolio as well as geographic footprint and enhance the position in strategic market segments through buyouts. During the first as well as the second quarter of 2017, acquisitions contributed 2% to growth.
Also, Allegion’s unwavering focus on innovation and investments in product development help boost the vitality index (an overall measure of innovativeness). Notably, the index increased from single digits in 2014 to high teens in 2016. The company continuously updates its products and develops new ones to keep up with changing market sentiments toward electronic security products and solutions.
Notably, for 2017, EPS is likely to witness an increase of 14.1% while for 2018, it is expected to rise 9.8%. Its long-term projected EPS growth rate is 14.2%.
Outlook Upbeat
The company updated its 2017 earnings guidance which adds to the optimism. Adjusted EPS is now projected in the range of $3.65–$3.80 versus the prior expectation of $3.60 to $3.70. The company expects full-year 2017 revenue growth of 6.5% to 7.5% on a year-over-year basis, higher than 5.5% to 6.5% expected earlier. Organically, revenues are projected in the 6% to 7% range, compared to 5.5% to 6.5% expected earlier.
Also, the Zacks Security and Safety Services Industry ranks among the top 6% (16 out of 265 industries, signaling that the stock is likely to benefit from favorable broader factors in the immediate future.
Return on Equity
Allegion’s trailing 12-month return on equity (ROE) supports its growth potential. Its ROE in the trailing 12 months is 198.3%, way more than its industry’s average of 10.4%. This reflects the company’s efficient usage of shareholders’ funds.
VGM Score
Allegion has a VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choices.
Other Stocks to Consider
Other top-ranked stocks in the industry include Lakeland Industries, Inc. (LAKE - Free Report) , Ituran Location and Control Ltd. (ITRN - Free Report) and Brady Corporation (BRC - Free Report) .
Fiscal 2018 earnings for Lakeland are expected to increase 57.6%.
Ituran, a Zacks Rank #2 stock, is expected to witness 36.6% growth in 2017 earnings.
Brady Corporation, also a Zacks Rank #2 stock, is expected to see a 9.6% rise in fiscal 2018 earnings.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
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Should You Add Allegion (ALLE) Stock to Your Portfolio Now?
Shares of Allegion plc (ALLE - Free Report) have rallied 38% year to date, outperforming the 9.7% gain of the industry it belongs to. Also, the company has outperformed the industry in each of the 4-week, 12-week and 52-week time frames. Allegion's focus on innovation and string of acquisitions are encouraging.
Moreover, its earnings estimates for 2017 and 2018 have moved up 0.5% and 1.5%, respectively, over the last 30 days, reflecting analysts’ optimism. The company’s Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Let us delve deeper into the other factors that make this stock a lucrative pick.
Growth Strategies Solid
Acquisitions form an integral part of Allegion’s growth strategy. The security products industry is highly fragmented, particularly in developing markets, and involves the use of emerging technology products that employ newer technologies. This creates numerous opportunities to broaden the product portfolio as well as geographic footprint and enhance the position in strategic market segments through buyouts. During the first as well as the second quarter of 2017, acquisitions contributed 2% to growth.
Also, Allegion’s unwavering focus on innovation and investments in product development help boost the vitality index (an overall measure of innovativeness). Notably, the index increased from single digits in 2014 to high teens in 2016. The company continuously updates its products and develops new ones to keep up with changing market sentiments toward electronic security products and solutions.
Notably, for 2017, EPS is likely to witness an increase of 14.1% while for 2018, it is expected to rise 9.8%. Its long-term projected EPS growth rate is 14.2%.
Outlook Upbeat
The company updated its 2017 earnings guidance which adds to the optimism. Adjusted EPS is now projected in the range of $3.65–$3.80 versus the prior expectation of $3.60 to $3.70. The company expects full-year 2017 revenue growth of 6.5% to 7.5% on a year-over-year basis, higher than 5.5% to 6.5% expected earlier. Organically, revenues are projected in the 6% to 7% range, compared to 5.5% to 6.5% expected earlier.
Also, the Zacks Security and Safety Services Industry ranks among the top 6% (16 out of 265 industries, signaling that the stock is likely to benefit from favorable broader factors in the immediate future.
Return on Equity
Allegion’s trailing 12-month return on equity (ROE) supports its growth potential. Its ROE in the trailing 12 months is 198.3%, way more than its industry’s average of 10.4%. This reflects the company’s efficient usage of shareholders’ funds.
VGM Score
Allegion has a VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choices.
Other Stocks to Consider
Other top-ranked stocks in the industry include Lakeland Industries, Inc. (LAKE - Free Report) , Ituran Location and Control Ltd. (ITRN - Free Report) and Brady Corporation (BRC - Free Report) .
Lakeland sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fiscal 2018 earnings for Lakeland are expected to increase 57.6%.
Ituran, a Zacks Rank #2 stock, is expected to witness 36.6% growth in 2017 earnings.
Brady Corporation, also a Zacks Rank #2 stock, is expected to see a 9.6% rise in fiscal 2018 earnings.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
See these buy recommendations now >>