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Allegion (ALLE) Lags Q1 Earnings & Revenues, Keeps View

Allegion plc ALLE posted dismal first-quarter 2016 results, wherein both earnings and revenues missed the respective Zacks Consensus Estimate.

Earnings and Revenue Discussion

Adjusted earnings came in at 61 cents per share, which missed the Zacks Consensus Estimate of 64 cents by 4.7%. However, earnings surged 19.6% year over year backed by higher margins.

Quarterly net revenue of $502.3 million missed the consensus mark of $503 million by a mere 0.1%. However, the figure increased 9.5% year over year including the impact of currency. The impact of currency headwinds and divestitures was more than offset by benefits from acquisitions and organic growth. The company benefitted from high demand for electronic security products.

Revenues at the America and EMEIA (Europe, Middle East, India and Africa) segments were up 2.5% and 45%, offsetting an 8.4% decline in the Asia-Pacific segment.

On an organic basis, revenues improved 3.6% year over year on the back of 3.4% growth in the Americas segment, a 3.3% rise at the EMEIA segment and an 8% increase in the Asia-Pacific segment. The improvement in revenues in the Americas reflects strong sales in residential sectors and improved pricing.

EMEIA revenues were driven by better pricing and benefit from acquisitions. Revenues at the Asia-Pacific climbed 8.4% organically (excluding Bocom Wincent, organic growth was up 14.3%) on the back of strong growth in mechanical and electronic hardware products, and favorable contribution from acquisitions.

Margins

Adjusted operating margin was 16.8%, up 40 basis points year over year, thanks to favorable pricing and productivity. The positives more than offset higher investments, inflation and the negative impact of the product mix.

2016 Guidance

Allegion expects adjusted earnings per share in the range of $3.25 to $3.40, reflecting an increase of 7.3% to 12.2%. The Zacks Consensus Estimate is currently pegged at $3.35.

Allegion expects revenues to increase 7% to 8%. Full-year organic revenues (excluding currency and acquisitions) are likely to increase 4% to 5%.

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

Stocks to Consider

Some better-ranked stocks in the protection and safety industry are ASSA ABLOY AB ASAZY, Alarm.Com Holdings, Inc. ALRM and SuperCom Ltd. SPCB. All these stocks carry a Zacks Rank #2 (Buy).

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ASSA ABLOY AB (ASAZY): Free Stock Analysis Report
 
SUPERCOM LTD (SPCB): Free Stock Analysis Report
 
ALARM.COM HLDGS (ALRM): Free Stock Analysis Report
 
ALLEGION PLC (ALLE): Free Stock Analysis Report
 
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