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Allegion's (ALLE) Q3 Earnings Meet Estimates, Revenues Lag

Allegion plc’s ALLE third-quarter 2017 adjusted earnings came in at $1.02 per share, in line with the Zacks Consensus Estimate. Adjusted earnings were up 9.7% from the prior-year quarter.
 

Allegion PLC Price, Consensus and EPS Surprise

 

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

 

Quarterly net revenues of $609.4 million missed the consensus mark of $618.8 million by 1.5%. The figure increased 4.9% on a year-over-year basis on the back of continued organic growth, synergies from acquisitions and favorable foreign currency impact. Revenues were also up 2.7% on an organic basis.

Segment Details

Revenues at the Americas segment rose 4.4% year over year to $455.2 million, primarily driven by favorable price and mid-teens growth in electronics, which offset the impact of timing of orders. Acquisitions and favorable foreign currency further added to the revenue growth.  Organic revenues also increased 2.8% year over year.

The EMEIA (Europe, Middle East, India and Africa) segment was up 7.5% to $125.1 million, driven by robust pricing in the quarter and favorable currency impact. Organically, revenues were up 3.1% on a year-over-year basis.

Revenues at the Asia-Pacific segment rose 2.1% year over year to $29.1 million on the back of favorable price and currency impact. Organically, revenues were up 0.4%.

Margins

Adjusted operating margin was 22.1%, up 30 basis points (bps) year over year owing to solid price performance, volume leverage and productivity, which offset negative impacts from unfavorable product mix, increased investments and inflation. Adjusted EBITDA margin was down 20 bps to 31.6%.

Financials

Allegion ended the quarter with cash and cash equivalents of $334.9 million, as of Sep 30, 2017, compared with $312.4 million as of Dec 31, 2016.

Available cash flow, as of Sep 30, 2017, was $136.3 million, lower than $152 million in the third quarter of 2016, due to a discretionary pension funding payment of $50 million in the first quarter, partially offset by an increase in earnings.

Capital expenditures totaled $33.7 million in the first nine months of 2017, compared with $26.4 million a year ago.

2017 Guidance

Adjusted earnings per share are now expected in the range of $3.75 to $3.80 versus the prior expectation of $3.65-$3.80.

The company expects full-year 2017 revenue growth in the band of 6.5% to 7% on a year-over-year basis, marginally lowered from what was expected earlier (in the band of 6.5% to 7.5%). Organically, revenues are expected in the 5% to 5.5% range, compared to 6% to 7% expected earlier.

Full-year adjusted effective tax rate is anticipated in the 18% to 18.5% range, slightly lower than the previously anticipated 18.5% to 19% range.
Available cash flow is targeted at approximately $300 million (including $50 million in discretionary pension funding payment).

Zacks Rank & Other Key Picks

The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the industry are Lakeland Industries, Inc. LAKE, Brady Corporation BRC and MSA Safety Incorporated MSA.

Lakeland sports a Zacks Rank #1. Current-year earnings for Lakeland are expected to increase 57.6%.

Brady, a Zacks Rank #2 stock, is expected to witness 9.6% growth in the current year.

MSA Safety, also a Zacks Rank #2 stock, is expected to see a 19.5% rise in 2017 earnings.

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Allegion PLC (ALLE): Free Stock Analysis Report
 
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