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Allegion (ALLE) to Report Q1 Earnings: What's in the Offing?
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Allegion plc (ALLE - Free Report) is slated to report first-quarter 2020 results on Apr 23, before market open.
The company delivered a positive earnings surprise of 1.97%, on average, in the trailing four quarters, surpassing estimates twice. Notably, Allegion’s fourth-quarter 2019 adjusted earnings of $1.28 per share came in line with the Zacks Consensus Estimate.
In the past three months, the company has lost 27.4% compared with the industry’s decline of 29.6%.
Factors at Play
Allegion’s business operations in several countries, including Mexico, Italy and Spain, have suffered temporary shutdowns in the first quarter, owing to the coronavirus outbreak. Notably, the impacts of the outbreak on the demand for the company’s products along with the governmental regulations imposed in response to the crisis are expected to be reflected in the company’s first-quarter results.
Also, high cost of sales remains a persistent concern for the company. For instance, in the last five years (2015-2019), the company's cost of sales jumped 6% (CAGR). Also, in 2019, the metric recorded an increase of 2.8% on a year-over-year basis. We believe high costs are likely to have adversely impacted the company’s margin and profitability in the first quarter as well.
Moreover, Allegion has been making incremental investments for product development, channel strategies and demand creation over time. In both the third and fourth quarters of 2019, incremental investments incurred had an adverse impact of 2 cents on earnings per share. The continuation of the actions might have put pressure on Allegion’s profitability in the to-be-reported quarter as well.
However, the steady demand for its electronic security products along with strength in both non-residential and residential businesses is likely to get reflected in the company’s top-line numbers. In addition, Allegion’s continued focus on improving operational efficiency along with its several cost-control measures and market partnerships might have been beneficial.
The Zacks Consensus Estimate for revenues from the company's Americas segment is pegged at $558 million, suggesting a decrease of 5.1% on a sequential basis. The consensus mark for the Asia Pacific segment’s revenues stands at $36.4 million, implying a 16.5% decline. The consensus estimate for revenues from the Europe, Middle East, India and Africa segment is currently pegged at $144 million, suggesting a 4% decline from the fourth-quarter reported figure.
Earnings Whispers
According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
But that is not the case here as we will see below.
Earnings ESP: Allegion has an Earnings ESP of -6.08% as the Most Accurate Estimate is pegged at 85 cents, lower than the Zacks Consensus Estimate of 91 cents.
Axon Enterprise, Inc. has an Earnings ESP of +2.13% and a Zacks Rank #3.
Ball Corporation has an Earnings ESP of +1.56% and a Zacks Rank of 3.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
Image: Bigstock
Allegion (ALLE) to Report Q1 Earnings: What's in the Offing?
Allegion plc (ALLE - Free Report) is slated to report first-quarter 2020 results on Apr 23, before market open.
The company delivered a positive earnings surprise of 1.97%, on average, in the trailing four quarters, surpassing estimates twice. Notably, Allegion’s fourth-quarter 2019 adjusted earnings of $1.28 per share came in line with the Zacks Consensus Estimate.
In the past three months, the company has lost 27.4% compared with the industry’s decline of 29.6%.
Factors at Play
Allegion’s business operations in several countries, including Mexico, Italy and Spain, have suffered temporary shutdowns in the first quarter, owing to the coronavirus outbreak. Notably, the impacts of the outbreak on the demand for the company’s products along with the governmental regulations imposed in response to the crisis are expected to be reflected in the company’s first-quarter results.
Also, high cost of sales remains a persistent concern for the company. For instance, in the last five years (2015-2019), the company's cost of sales jumped 6% (CAGR). Also, in 2019, the metric recorded an increase of 2.8% on a year-over-year basis. We believe high costs are likely to have adversely impacted the company’s margin and profitability in the first quarter as well.
Moreover, Allegion has been making incremental investments for product development, channel strategies and demand creation over time. In both the third and fourth quarters of 2019, incremental investments incurred had an adverse impact of 2 cents on earnings per share. The continuation of the actions might have put pressure on Allegion’s profitability in the to-be-reported quarter as well.
However, the steady demand for its electronic security products along with strength in both non-residential and residential businesses is likely to get reflected in the company’s top-line numbers. In addition, Allegion’s continued focus on improving operational efficiency along with its several cost-control measures and market partnerships might have been beneficial.
The Zacks Consensus Estimate for revenues from the company's Americas segment is pegged at $558 million, suggesting a decrease of 5.1% on a sequential basis. The consensus mark for the Asia Pacific segment’s revenues stands at $36.4 million, implying a 16.5% decline. The consensus estimate for revenues from the Europe, Middle East, India and Africa segment is currently pegged at $144 million, suggesting a 4% decline from the fourth-quarter reported figure.
Earnings Whispers
According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
But that is not the case here as we will see below.
Earnings ESP: Allegion has an Earnings ESP of -6.08% as the Most Accurate Estimate is pegged at 85 cents, lower than the Zacks Consensus Estimate of 91 cents.
Allegion PLC Price and EPS Surprise
Allegion PLC price-eps-surprise | Allegion PLC Quote
Zacks Rank: Allegion carries a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right mix of elements to beat estimates this time around:
TPI Composites, Inc. (TPIC - Free Report) has an Earnings ESP of +74.55% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon Enterprise, Inc. has an Earnings ESP of +2.13% and a Zacks Rank #3.
Ball Corporation has an Earnings ESP of +1.56% and a Zacks Rank of 3.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>