Will Allegion Americas' Sales Dent Allegion's (ALLE) Q3 Earnings?
Allegion plc ALLE is scheduled to release third-quarter 2023 results on Oct 31 before market open.
The Zacks Consensus Estimate for the company’s third-quarter 2023 earnings has decreased by a penny in the past 60 days. However, the company has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average beat being 12.8%.
Let’s see how things are shaping up for Allegion this earnings season.
Factors to Note
ALLE’s Allegion Americas segment has been reaping the benefits from strength in residential and electronics end markets. However, softness in the non-residential end market has lately been weighing on the segment’s performance. For the third quarter, we expect the segment’s revenues to dip 0.6% year over year. Our estimate for the segment’s adjusted operating income indicates a decrease of 1.5% from the year-ago reported figure.
The Allegion International segment has been exhibiting weakness due to lower volumes in the Global Portable Securities business. Due to this adversity, in the third quarter, we expect muted revenue growth of 1.6% for the segment, from the year-ago reported number. However, our estimate for the segment’s adjusted operating income indicates a 9.2% rise from the year-ago reported number.
The increasing cost of sales due to escalating raw material costs is likely to dent ALLE’s bottom line in the to-be-reported quarter. For the quarter, we expect the company’s adjusted earnings to decline 1.9% from the year-ago reported number.
Given the company’s substantial international presence, adverse foreign currency movements are likely to partially dent its top line in the to-be-reported quarter.
However, the acquisition of Plano Group (January 2023), which expanded ALLE’s Interflex portfolio and AWFM business with new capabilities in SaaS models and recurring revenue solutions, has been driving the company’s third-quarter results. We expect Allegion’s total revenues to increase 0.6% from the year-ago reported figure.
Allegion PLC Price and EPS Surprise
Allegion PLC price-eps-surprise | Allegion PLC Quote
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for ALLE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as elaborated below.
Earnings ESP: Allegion has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $ 1.71. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: Allegion presently carries a Zacks Rank of 3.
Highlights of Q2 Earnings
Allegion’s adjusted earnings in the second quarter were $1.76 per share, which surpassed the Zacks Consensus Estimate of adjusted earnings of $1.69 per share. The bottom line increased 28.5% from the year-ago period’s earnings of $1.13 per share. In the quarter under review, Allegion’s revenues were $912.5 million, increasing 18% from the year-ago quarter. The company’s revenues missed the consensus estimate of $927 million.
Stocks to Consider
Here are some companies within the broader Industrial Products sector, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.
Emerson Electric Co. EMR has an Earnings ESP of +0.02% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to release fourth-quarter fiscal 2023 (ended Sep 30, 2023) results on Nov 7. Emerson’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters while missing in one, the average beat being 7.4%.
Ingersoll Rand Inc. IR has an Earnings ESP of +0.36% and a Zacks Rank of 3. The company is slated to release third-quarter 2023 results on Nov 1.
Ingersoll Rand’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 14.9%.
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Emerson Electric Co. (EMR) : Free Stock Analysis Report
Ingersoll Rand Inc. (IR) : Free Stock Analysis Report
Allegion PLC (ALLE) : Free Stock Analysis Report
