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Allegion (ALLE) Withdraws Annual View on Coronavirus Concerns

Zacks Equity Research
·3 mins read

Allegion plc ALLE has withdrawn its earlier announced guidance for 2020 on end-market uncertainties due to the coronavirus pandemic.

The company stated that its business operations in several countries, including Mexico, Italy and Spain, have suffered temporarily shutdowns, owing to the coronavirus outbreak. Also, it expects periodic work shutdowns at some of its operations on lower customer demand and material shortages. However, it remains committed to protecting the safety, health and well-being of employees and partners amid the crisis.

Guidance Withdrawn

On the fourth-quarter 2019 conference call held in February, Allegion had anticipated adjusted earnings of $5.10-$5.20 per share for 2020, suggesting year-over-year growth of 5.3% at the mid-point.

Also, for the year, the company had expected revenue growth of 3-4% on a reported basis and 3.5-4.5% on an organic basis. Also, its cash flow was projected to be $450-$470 million.

However, on uncertainties, regarding the impacts of the outbreak on financial and operating results, Allegion has now withdrawn its guidance for 2020.

Notably, the duration of the coronavirus pandemic, its geographic spread and the impacts of the governmental regulations imposed in response to the crisis will likely have a bearing on the company’s results. This along with its impacts of the outbreak on the demand for its products and services will likely get reflected in the yearly results.

Business Actions

In response to the crisis, Allegion has been executing several cost-control measures to maintain a healthy capital structure. As noted, some of the actions taken by the company include the reduction of discretionary expenses, eliminating unnecessary investments, a hiring freeze and re-prioritization of its capital expenditure.

Zacks Rank, Price Performance and Estimate Trend

Allegion, with an $8.8-billion market capitalization, currently carries a Zacks Rank #4 (Sell).

In the past month, the company’s share price has decreased 2.4% against the industry’s growth of 9.6%.

 


 

In the past 30 days, the Zacks Consensus Estimate for its earnings has been lowered by 7.9% to $4.73 for 2020 and by 5.9% to $5.25 for 2021.

Stocks to Consider

Some better-ranked stocks from the Zacks Industrial Products sector are Acco Brands Corporation ACCO, Alarm.com Holdings, Inc. ALRM and Broadwind Energy, Inc. BWEN. All the companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Acco Brands delivered a positive earnings surprise of 19.04%, on average, in the trailing four quarters.

Alarm.com delivered a positive earnings surprise of 19.30%, on average, in the trailing four quarters.

Broadwind Energy delivered a positive earnings surprise of 10.42%, on average, in the trailing four quarters.

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