Allegion (ALLE) To Report Q1 Earnings: Will It Surprise?
Zacks Investment Research | Apr 25, 2017 10:57PM ET
Allegion PLC (NYSE:ALLE) , a provider of safety and security products, is scheduled to release first-quarter 2017 financial numbers, before the opening bell on Apr 27.
In the last reported quarter, the company had posted a negative 6.90% earnings surprise. Notably, the company surpassed the Zacks Consensus Estimate in only one of the last four quarters, resulting in an average earnings miss of 0.62%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Allegion generates a major portion of its revenues from the U.S. residential sector, especially in the commercial and residential construction and remodeling markets. Its revenues are expected to increase with the gradual recovery in the housing market and strength in consumer spending patterns.
Also, Allegion's acquisitions and focus on innovation are encouraging. Allegion’s continued focus on innovation and investments in new product development drove the vitality index (an overall measure of innovativeness) from single digits in 2014 to high teens in 2016. We expect the improvement to have continued in the first quarter.
Allegion projects double-digit earnings growth given improving free cash flow generation. The company’s performance in 2016 was impressive, courtesy of higher margins and revenues from acquisitions and organic growth. We expect this trend to continue in the to-be-reported quarter.d
However, we are concerned about economic slowdown in certain pockets of the world where Allegion has considerable presence. Moreover, owing to the company’s substantial international presence, volatile currency translations could prove to be a significant headwind.
For the first quarter, the Zacks Consensus Estimate for earnings is pegged at 69 cents a share, reflecting an increase of 13.1% year over year. The consensus estimate for revenues is $536.9 million, pointing at 6.9% year-over-year growth.
Earnings Whispers
Our proven model does not conclusively show that Allegion is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Zacks Investment Research
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