Allegion plc ALLE reported disappointing results for second-quarter 2019, wherein adjusted earnings and revenues lagged the Zacks Consensus Estimate.
Quarterly adjusted earnings came in at $1.26 per share, missing the Zacks Consensus Estimate of $1.31. However, the bottom line was 0.8% higher than the year-ago figure. The upside can be primarily attributed to solid sales growth and improved operating income.
Revenues came in at $731.2 million, up 3.8% year over year. However, the top line missed the consensus estimate of $743.7 million. Revenues improved 3% on an organic basis. The rise was backed by strength in Americas non-residential business, strong pricing and acquisition benefits, partially offset by adverse impacts of unfavorable foreign exchange movements.
Allegion PLC Price, Consensus and EPS Surprise
Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote
Revenues in the Americas rose 3.5% year over year to $545.1 million. EMEIA (Europe, Middle East, India and Africa) revenues declined 3.8% to $142.2 million. Revenues in the Asia-Pacific surged 45.8% to $43.9 million in the reported quarter.
In the second quarter, Allegion’s cost of sales escalated 2.9% year over year to $410.5 million. Gross profit grew 4.9% to $320.7 million while gross margin improved 50 basis points (bps) to 43.9%.
Selling and administrative expenses jumped 7.9% year over year to $175 million.
Adjusted operating margin expanded 20 bps to 21.5%.
Balance Sheet/Cash Flow
As of Jun 30, 2019, Allegion had cash and cash equivalents of $157.8 million, down from $283.8 recorded on Dec 31, 2018. Long-term debt was $1,393.1 million, down from $1,409.5 million recorded at the end of 2018.
In the first six months of 2019, the company generated net cash of $107 million from operating activities, down 9.9% from the year-ago period. Capital expenditures totaled $29.3 million compared with $20.9 million a year ago.
Adjusted earnings per share are now expected in the range of $4.80 to $4.90 compared with $4.75 to $4.90 guided earlier.
The company expects full-year 2019 revenue growth on both reported and organic basis in the band of 4.5-5.5%.
Full-year adjusted effective tax rate is anticipated to be 16%.
Available cash flow is targeted to be approximately $410-$430 million.
Zacks Rank & Other Key Picks
Allegion currently carries a Zacks Rank #2(Buy).
Some other top-ranked stocks in the same space are DXP Enterprises, Inc. DXPE, AptarGroup, Inc. ATR and Avery Dennison Corporation AVY. While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), AptarGroup and Avery Dennison carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises delivered average earnings surprise of 48.47% in the trailing four quarters.
AptarGroup pulled off average positive earnings surprise of 8.27% in the trailing four quarters.
Avery Dennison outpaced estimates in the last reported quarter by 1.10%.
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