Taking on analysts’ expectations and winning: Allegion plc (ALLE)

Allegion plc (NYSE: ALLE) stock jumped 0.03% on Friday to $91.13 against a previous-day closing price of $91.10. With 1.24 million shares changed hands, the volume of the stock remained heavier than its average volume of 0.68 million shares. During the session, the Security & Protection Services company that operates in wider Industrials sector, reached to the highest price of $94.14 whereas the lowest price it dropped to was $91.13. The 52-week range on ALLE shows that it touched its highest point at $139.55 and its lowest point at $89.01 during that stretch. It currently has a 1-year price target of $117.08. With its current market cap of 8.31 billion, ALLE has annualized dividend of $1.64 while the current yield stands at 1.80%. Beta for the stock currently stands at 1.06.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of ALLE was down-trending over the past week, with a drop of -4.22%, but this was down by -11.64% over a month. Three-month performance dropped to -4.53% while six-month performance fell -22.42%. The stock lost -32.65% in the past year, while it has lost -31.19% so far this year. A look at the trailing 12-month EPS for ALLE yields 5.20 with Next year EPS estimates of 6.06. For the next quarter, that number is 1.48. This implies an EPS growth rate of 57.60% for this year and 12.26% for next year. EPS is expected to grow by 9.90% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 17.70%.

Float and Shares Shorts:

At present, 87.90 million ALLE shares are outstanding with a float of 87.41 million shares on hand for trading. On Aug 30, 2022, short shares totaled 1.95 million, which was 2.22% higher than short shares on Jul 28, 2022. In addition to Mr. David D. Petratis as the firm’s Exec. Chairman, Mr. Jeffrey N. Braun serves as its Sr. VP & Gen. Counsel.

Institutional Ownership:

Through their ownership of 97.25% of ALLE’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 57.03% of ALLE, in contrast to 38.13% held by mutual funds. Shares owned by individuals account for 0.78%. As the largest shareholder in ALLE with 11.55% of the stake, The Vanguard Group, Inc. holds 10,147,507 shares worth 10,147,507. A second-largest stockholder of ALLE, APG Asset Management NV, holds 5,403,570 shares, controlling over 6.15% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in ALLE, holding 4,823,978 shares or 5.49% stake. With a 5.61% stake in ALLE, the Stichting Pensioenfonds ABP is the largest stakeholder. A total of 4,928,668 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.96% of ALLE stock, is the second-largest Mutual Fund holder. It holds 2,601,795 shares valued at 247.43 million. Vanguard Small Cap Index Fund holds 2.53% of the stake in ALLE, owning 2,222,544 shares worth 211.36 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2022, ALLE reported revenue of $773.10M and operating income of $147.10M. Over the past year, revenue came in at $2.92B while operating income stood at $517.60M. It generated $115.10M net income for the quarter, which came to $464.40M over the last twelve months. The EBITDA in the recently reported quarter was $171.10M and diluted EPS was $1.30. EBITDA for the full year was $645.20M.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for ALLE since 14 analysts follow the stock currently. There are 4 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 6 believe that the stock is worth HOLDING, 3 give it an OVERWEIGHT rating, and 1 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With ALLE analysts setting a high price target of $125.00 and a low target of $100.00, the average target price over the next 12 months is $115.08. Based on these targets, ALLE could surge 37.17% to reach the target high and rise by 9.73% to reach the target low. Reaching the average price target will result in a growth of 26.28% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. ALLE will report FY 2022 earnings on 02/21/2023. Analysts have provided yearly estimates in a range of $5.65 being high and $5.32 being low. For ALLE, this leads to a yearly average estimate of $5.41. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Allegion plc surprised analysts by $0.03 when it reported $1.37 EPS against a consensus estimate of $1.34. The surprise factor in the prior quarter was $0.09. Based on analyst estimates, the high estimate for the next quarter is $1.56 and the low estimate is $1.44. The average estimate for the next quarter is thus $1.49.

Summary of Insider Activity:

Insiders traded ALLE stock several times over the past three months with 1 Buys and 4 Sells. In these transactions, 52,035 shares were bought while 908 shares were sold. The number of buy transactions has increased to 31 while that of sell transactions has risen to 61 over the past year. The total number of shares bought during that period was 140,411 while 57,368 shares were sold.

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