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Allegion (ALLE) Tops Q3 Earnings Estimates, Revises '18 View

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Allegion plc (ALLE - Free Report) reported better-than-expected results for third-quarter 2018.

Earnings/Revenues

Quarterly adjusted earnings came in at $1.23 per share, outpacing the Zacks Consesus Estimate of $1.21. The bottom line also came in 20.6% higher than the year-ago tally. This stellar performance was backed by solid revenues, price-realization initiatives, increased productivity and diligent cost-cutting moves.

Revenues in the reported quarter came in at $711.5 million, up 16.8% year over year. The top line also exceeded the Zacks Consensus Estimate of $699 million. Revenues improved 8.5% year over year on an organic basis. The company stated that adverse impacts of unfavorable foreign exchange movements were offset by solid end-market sales and acquisition benefits in the reported quarter.

Segmental Break-Up

Revenues in the Americas segment rose 16.5% year over year to $530.1 million. The EMEIA (Europe, Middle East, India and Africa) segment’s revenues increased 7.4% to $134.4 million. Revenues in the Asia-Pacific segment surged 61.5% from the year-ago quarter to $47 million in the reported quarter.

Allegion PLC Price, Consensus and EPS Surprise

 

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

Costs/Margins

In the Sep-end quarter, Allegion’s cost of sales escalated 20% year over year to $402.1 million. Gross profit grew 8.6% year over year, while gross margin shrunk 150 basis points (bps) to 43.5%.

Selling and administrative expenses jumped 13.4% year over year to $167.1 million.

Adjusted operating margin contracted 90 bps to 20% in the quarter under review.

Balance Sheet/Cash Flow

Exiting the third quarter, Allegion had cash and cash equivalents of $189.7 million, down from $466.2 recorded as of Dec 31 2018.  Long-term debt stood at $1,417.7 million, down from $1,442.3 million recorded in 2017-end.

In the first nine months of 2018, the company generated net cash of $260.4 million from its operating activities, surging 53.2% from the year-ago period. Capital expenditures totaled $31.8 million against $33.7 million used in the comparable period last year.

Outlook

For 2018, Allegion has revised its earnings view from $4.35-$4.50 per share to $4.43-$4.50 per share range. On the other hand, revenues for the full year are now projected to be up13-13.5%, as against the prior view of 12.5-13.5%.

Stocks to Consider

Allegion currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Industrial Products sector are listed below:

Altra Industrial Motion Corp. sports a Zacks Rank #1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% in the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atkore International Group Inc. (ATKR - Free Report) flaunts a Zacks Rank of 1. The company generated an average positive earnings surprise of 24.46% in the trailing four quarters.

Donaldson Company, Inc. (DCI - Free Report) also sports a Zacks Rank of 1. The company delivered an average positive earnings surprise of 2.29% in the preceding four quarters.

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