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Allegion (ALLE) Q1 Earnings and Revenues Beat Estimates

Zacks Equity Research

Allegion plc ALLE reported impressive results for first-quarter 2019, wherein adjusted earnings and revenues beat the Zacks Consensus Estimate.

Earnings/Revenues

Quarterly adjusted earnings came in at 88 cents per share, outpacing the Zacks Consensus Estimate of 87 cents. The bottom line was also 10% higher than the year-ago figure. The upside can be primarily attributed to impressive sales growth and improved operating income.

Revenues for the reported quarter came in at $655 million, up 6.8% year over year. The top line also surpassed the consensus estimate of $651.6 million. Revenues improved 5.8% on an organic basis. The stellar performance was backed by strength in Americas non-residential business, and acquisition benefits, partially offset by adverse impacts of unfavorable foreign exchange movements.

Segmental Breakup

Revenues in the Americas rose 8.2% year over year to $475.3 million. EMEIA (Europe, Middle East, India and Africa) revenues declined 4.9% to $142.9 million. Revenues in the Asia-Pacific surged 55.3% to $36.8 million in the reported quarter.

Allegion PLC Price, Consensus and EPS Surprise

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

Costs/Margins

In the first quarter, Allegion’s cost of sales escalated 6.4% year over year to $378.1 million. Gross profit grew 7.4% while gross margin improved 30 basis points (bps) to 42.3%.

Selling and administrative expenses jumped 6.2% year over year to $168.9 million.

Adjusted operating margin expanded 10 bps to 17.1%.

Balance Sheet/Cash Flow

As of Mar 31, 2019, Allegion had cash and cash equivalents of $153.8 million, down from $283.8 recorded as of Dec 31 2018.  Long-term debt was $1,401.3 million, down from $1,409.5 million recorded at the end of 2018.

In first-quarter 2019, the company used net cash of $12.6 million from its operating activities, compared with $10.1 million used in the year-ago quarter. Capital expenditures totaled $12.3 million compared with $8.7 million a year ago.

2019 Guidance

Adjusted earnings per share are now expected in the range of $4.75 to $4.90, reflecting an increase of 6% to 9% year over year.

The company expects full-year 2019 revenue growth on both reported and organic basis in the band of 5-6%.

Full-year adjusted effective tax rate is anticipated to be 16%.

Available cash flow is targeted to be approximately $430-$450 million.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the space are DXP Enterprises, Inc. DXPE, Cintas Corporation CTAS and Actuant Corporation ATU. While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), Cintas and Actuant carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DXP Enterprises delivered average earnings surprise of 46.55% in the trailing four quarters.

Cintas pulled off average positive earnings surprise of 6.09% in the trailing four quarters.

Actuant delivered average earnings surprise of 11.01% in the trailing four quarters.

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