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Allegion (ALLE) Down 6.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Allegion (ALLE - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Allegion due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Allegion Q1 Earnings Top Estimates, 2022 View Solid
Allegion plc reported better-than-expected results for first-quarter 2022. ALLE’s earnings surpassed the Zacks Consensus Estimate by 8.1% and sales beat the same by 4%.
Adjusted earnings in the quarter under review were $1.07 per share, surpassing the Zacks Consensus Estimate of 99 cents. However, the bottom line declined 10.8% from the year-ago figure of $1.20, as supply-chain woes, and shortages of electronics and other parts adversely impacted sales. High costs and expenses added to the woes.
Revenue Details
In the quarter under review, Allegion’s revenues were $723.6 million, reflecting growth of 4.2% from the year-ago quarter’s figure. Organic sales in the quarter increased 6.4%, while forex woes left an adverse impact of 1.9%. Acquisitions/divestitures lowered sales 0.3%. Allegion’s revenues surpassed the Zacks Consensus Estimate of $696 million.
The company reported revenues under two segments. A brief discussion on the quarterly results is provided below:
Revenues from Allegion Americas increased 5.9% year over year to $528.2 million. ALLE accounted for 73% of the quarter’s sales. Lower sales from the residential business were partially offset by gains in the non-residential business. Supply-chain constraints, and electronics and other parts’ shortages were spoilsports in the quarter.
Organic sales increased 5.9% year over year.
Revenues from Allegion International were $195.4 million in the quarter and flat year over year. The metric accounted for 27% of the quarter’s sales.
Organic sales increased 7.6% year over year while foreign currency translation had a negative impact of 6.8% on sales.
Margin Profile
In the reported quarter, Allegion’s cost of sales grew 9.6% year over year to $ 434.9 million. The cost of sales was 60.1% of the quarter’s net sales. The gross profit decreased 2.9% year over year to $ 288.7 million, while the gross margin contracted 293 basis points (bps) to 39.9%.
Selling and administrative expenses increased 3.4% year over year to $171.7million. The metric represented 23.7% of net sales in the reported quarter compared with 23.9% in the year-ago period. Adjusted earnings before interest, tax, depreciation and amortization were $141.9 million, reflecting a year-over-year decrease of 7.9%. Margin decreased 260 bps year over year to 19.6%.
The adjusted operating income in the quarter decreased 8.6% year over year to $122.5 million. The adjusted margin was 16.9%, down from 19.3% a year ago. The results suffered cost inflation related to material, freight, incremental investments and operational inefficiencies. This was partially offset by the impacts of volume leverage.
Interest expenses were $11.9 million, down 3.3% year over year. The effective tax rate in the quarter was 13.2%, up from 11.7% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Allegion had cash and cash equivalents of $305.1 million, down 23.3% from $397.9 million at the end of the previous quarter. Long-term debt decreased 0.2% to $1,426.8 million from $1,429.5 million in the previous quarter.
In the first three months of 2022, ALLE generated net cash of $20.5 million from operating activities, decreasing 81.7% from the previous year’s level. Capital expenditure was $8.7 million, increasing 38.1% year over year. The free cash flow was $11.8 million for the first three months of 2022.
In the first three months of the year, Allegion repurchased 0.5 million shares for $61.0 million, decreasing 59.3% year over year. Dividends paid out in the year totaled $35.8 million, reflecting an increase of 10.2% from the previous-year quarter’s level.
Outlook
For 2022, Allegion anticipates benefiting from strengthening end-market demand and margin improvements. Effective pricing actions will be helpful throughout the year. On a sequential basis, ALLE expects improvements in revenues, margins and earnings.
Allegion adjusted its full-year revenue growth to 7.5-9%, from the earlier issued projection of 6-7.5%. Organic sales are expected to rise 8.5-10%. Adjusted earnings are likely to be $5.55-$5.75 per share. Incremental investment is expected to be 15-20 cents per share. Free cash flow for the year is anticipated to be $470-$490 million. The tax rate in the year is expected to be 13%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Allegion has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allegion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Allegion (ALLE) Down 6.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Allegion (ALLE - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Allegion due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Allegion Q1 Earnings Top Estimates, 2022 View Solid
Allegion plc reported better-than-expected results for first-quarter 2022. ALLE’s earnings surpassed the Zacks Consensus Estimate by 8.1% and sales beat the same by 4%.
Adjusted earnings in the quarter under review were $1.07 per share, surpassing the Zacks Consensus Estimate of 99 cents. However, the bottom line declined 10.8% from the year-ago figure of $1.20, as supply-chain woes, and shortages of electronics and other parts adversely impacted sales. High costs and expenses added to the woes.
Revenue Details
In the quarter under review, Allegion’s revenues were $723.6 million, reflecting growth of 4.2% from the year-ago quarter’s figure. Organic sales in the quarter increased 6.4%, while forex woes left an adverse impact of 1.9%. Acquisitions/divestitures lowered sales 0.3%. Allegion’s revenues surpassed the Zacks Consensus Estimate of $696 million.
The company reported revenues under two segments. A brief discussion on the quarterly results is provided below:
Revenues from Allegion Americas increased 5.9% year over year to $528.2 million. ALLE accounted for 73% of the quarter’s sales. Lower sales from the residential business were partially offset by gains in the non-residential business. Supply-chain constraints, and electronics and other parts’ shortages were spoilsports in the quarter.
Organic sales increased 5.9% year over year.
Revenues from Allegion International were $195.4 million in the quarter and flat year over year. The metric accounted for 27% of the quarter’s sales.
Organic sales increased 7.6% year over year while foreign currency translation had a negative impact of 6.8% on sales.
Margin Profile
In the reported quarter, Allegion’s cost of sales grew 9.6% year over year to $ 434.9 million. The cost of sales was 60.1% of the quarter’s net sales. The gross profit decreased 2.9% year over year to $ 288.7 million, while the gross margin contracted 293 basis points (bps) to 39.9%.
Selling and administrative expenses increased 3.4% year over year to $171.7million. The metric represented 23.7% of net sales in the reported quarter compared with 23.9% in the year-ago period. Adjusted earnings before interest, tax, depreciation and amortization were $141.9 million, reflecting a year-over-year decrease of 7.9%. Margin decreased 260 bps year over year to 19.6%.
The adjusted operating income in the quarter decreased 8.6% year over year to $122.5 million. The adjusted margin was 16.9%, down from 19.3% a year ago. The results suffered cost inflation related to material, freight, incremental investments and operational inefficiencies. This was partially offset by the impacts of volume leverage.
Interest expenses were $11.9 million, down 3.3% year over year. The effective tax rate in the quarter was 13.2%, up from 11.7% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Allegion had cash and cash equivalents of $305.1 million, down 23.3% from $397.9 million at the end of the previous quarter. Long-term debt decreased 0.2% to $1,426.8 million from $1,429.5 million in the previous quarter.
In the first three months of 2022, ALLE generated net cash of $20.5 million from operating activities, decreasing 81.7% from the previous year’s level. Capital expenditure was $8.7 million, increasing 38.1% year over year. The free cash flow was $11.8 million for the first three months of 2022.
In the first three months of the year, Allegion repurchased 0.5 million shares for $61.0 million, decreasing 59.3% year over year. Dividends paid out in the year totaled $35.8 million, reflecting an increase of 10.2% from the previous-year quarter’s level.
Outlook
For 2022, Allegion anticipates benefiting from strengthening end-market demand and margin improvements. Effective pricing actions will be helpful throughout the year. On a sequential basis, ALLE expects improvements in revenues, margins and earnings.
Allegion adjusted its full-year revenue growth to 7.5-9%, from the earlier issued projection of 6-7.5%. Organic sales are expected to rise 8.5-10%. Adjusted earnings are likely to be $5.55-$5.75 per share. Incremental investment is expected to be 15-20 cents per share. Free cash flow for the year is anticipated to be $470-$490 million. The tax rate in the year is expected to be 13%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Allegion has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allegion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.