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Allegion plc (ALLE - Free Report) recently priced a public offering of senior notes worth $600 million in aggregate principal amount. The offering, which is made by the company’s subsidiary, Allegion US Holding, is anticipated to close on Jun 22.
Allegion’s shares inched up 1.1% yesterday to eventually close the trading session at $113.36.
Inside the Headlines
The senior notes that carry an interest rate of 5.411% are scheduled to mature on Jul 1, 2032. The notes have been priced at 99.998% of the principal amount. Interest rates on the notes will be paid semi-annually on Jan 1 and Jul 1, starting from Jan 1, 2023.
Allegion expects to receive net proceeds of approximately $596.1 million in aggregate from the offering. The company stated that the transaction proceeds will be used for financing the buyout of Stanley Access Technologies. The buyout, anticipated to be completed in third-quarter 2022, is likely to strengthen Allegion’s exposure in control solutions offerings.
As noted, in case the acquisition fails to get completed as anticipated, the net proceeds will be used for meeting general corporate purposes.
Debt Profile
Allegion has a highly leveraged balance sheet. Exiting first-quarter 2022, the company had long-term debt of $1,426.8 million. Exiting the quarter, it had a term loan facility of $250 million (2021 Term Facility), of which $246.9 million was outstanding. Although the current notes offering will help finance the Stanley Access Technologies buyout, we believe it will also add to Allegion’s existing debt balance. An unwarranted rise in debt levels can inflate its financial obligations and hurt profitability.
Zacks Rank, Price Performance and Estimate Revision
Allegion, with approximately $10 billion market capitalization, currently carries a Zacks Rank #4 (Sell). In the quarters ahead, supply-chain woes and cost inflation, along with high debt level and high tax rates, are predicted to be concerning for the company. However, it stands to benefit from strength in the end markets, product development and a large customer base.
In the past 30 days, the Zacks Consensus Estimate for earnings decreased 0.7% to $5.63 for 2022 and 1.4% to $6.33 for 2023. Earnings estimates for the second quarter of 2022 have been stable at $1.34 per share.
Image Source: Zacks Investment Research
In the past three months, the stock has gained 1.7% against the industry’s decline of 5%.
Stocks to Consider
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NSSC’s earnings estimates have increased 16.2% for fiscal 2022 (ending June 2022) in the past 30 days. Its shares have increased 0.3% in the past three months.
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In the past 30 days, ROP’s earnings estimates have increased 0.1% for 2022. The stock has dipped 2.3% in the past three months.
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Allegion (ALLE) Prices Senior Notes Offering Worth $600M
Allegion plc (ALLE - Free Report) recently priced a public offering of senior notes worth $600 million in aggregate principal amount. The offering, which is made by the company’s subsidiary, Allegion US Holding, is anticipated to close on Jun 22.
Allegion’s shares inched up 1.1% yesterday to eventually close the trading session at $113.36.
Inside the Headlines
The senior notes that carry an interest rate of 5.411% are scheduled to mature on Jul 1, 2032. The notes have been priced at 99.998% of the principal amount. Interest rates on the notes will be paid semi-annually on Jan 1 and Jul 1, starting from Jan 1, 2023.
Allegion expects to receive net proceeds of approximately $596.1 million in aggregate from the offering. The company stated that the transaction proceeds will be used for financing the buyout of Stanley Access Technologies. The buyout, anticipated to be completed in third-quarter 2022, is likely to strengthen Allegion’s exposure in control solutions offerings.
As noted, in case the acquisition fails to get completed as anticipated, the net proceeds will be used for meeting general corporate purposes.
Debt Profile
Allegion has a highly leveraged balance sheet. Exiting first-quarter 2022, the company had long-term debt of $1,426.8 million. Exiting the quarter, it had a term loan facility of $250 million (2021 Term Facility), of which $246.9 million was outstanding. Although the current notes offering will help finance the Stanley Access Technologies buyout, we believe it will also add to Allegion’s existing debt balance. An unwarranted rise in debt levels can inflate its financial obligations and hurt profitability.
Zacks Rank, Price Performance and Estimate Revision
Allegion, with approximately $10 billion market capitalization, currently carries a Zacks Rank #4 (Sell). In the quarters ahead, supply-chain woes and cost inflation, along with high debt level and high tax rates, are predicted to be concerning for the company. However, it stands to benefit from strength in the end markets, product development and a large customer base.
In the past 30 days, the Zacks Consensus Estimate for earnings decreased 0.7% to $5.63 for 2022 and 1.4% to $6.33 for 2023. Earnings estimates for the second quarter of 2022 have been stable at $1.34 per share.
Image Source: Zacks Investment Research
In the past three months, the stock has gained 1.7% against the industry’s decline of 5%.
Stocks to Consider
Some better-ranked companies from the Zacks industrial products sector are discussed below:
KnowBe4, Inc. presently has a Zacks Rank #1 (Strong Buy). Its earnings surprise in the last four quarters was 208.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, KNBE’s earnings estimates have decreased 6.7% for 2022. The stock has dipped 1.4% in the past three months.
Napco Security Technologies, Inc. (NSSC - Free Report) presently carries a Zacks Rank #2 (Buy). NSSC delivered a trailing four-quarter earnings surprise of 11.4%, on average.
NSSC’s earnings estimates have increased 16.2% for fiscal 2022 (ending June 2022) in the past 30 days. Its shares have increased 0.3% in the past three months.
Roper Technologies, Inc. (ROP - Free Report) presently has a Zacks Rank #2. Its earnings surprise in the last four quarters was 2%, on average.
In the past 30 days, ROP’s earnings estimates have increased 0.1% for 2022. The stock has dipped 2.3% in the past three months.