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Earnings Beat: Allegion plc Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Allegion plc (NYSE:ALLE) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 6.3% to hit US$694m. Allegion reported statutory earnings per share (EPS) US$1.18, which was a notable 18% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Allegion

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earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Allegion's ten analysts is for revenues of US$2.85b in 2021, which would reflect a modest 3.9% increase on its sales over the past 12 months. Statutory earnings per share are predicted to accumulate 9.9% to US$5.05. In the lead-up to this report, the analysts had been modelling revenues of US$2.73b and earnings per share (EPS) of US$4.76 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

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Despite these upgrades,the analysts have not made any major changes to their price target of US$132, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Allegion at US$165 per share, while the most bearish prices it at US$109. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Allegion's past performance and to peers in the same industry. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 5.2% growth on an annualised basis. That is in line with its 5.8% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.8% per year. So although Allegion is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Allegion's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Allegion analysts - going out to 2023, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Allegion you should know about.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.