Why Allegion Stock Is Rocketing Higher Today
Allegion soared past analysts' expectations for its second-quarter earnings.
Overview
Shares of access and security leader Allegion (NYSE: ALLE) soared 12% as of 3 p.m. ET on Thursday after the company rocketed past earnings expectations and raised its guidance for the full year. Sales and adjusted earnings per share rose 13% and 18%, respectively, while management raised its full-year sales growth guidance from 7% to 8% at the midpoint. After experiencing enterprise resource disruptions in Q1, Allegion's strong Q2 results were welcomed by the market today.
While locks and security access may not sound like the most exciting business, Allegion is at the forefront of the industry and has delivered annualized total returns of 10% since 2013. The company typically allocates half of its free cash flow to tuck-in acquisitions and has become a rather successful roll-up specialist. This quarter's results show that they're still seeing success with M&A, which added 5 percentage points to Allegion's sales growth.
Details
As Allegion moves beyond mechanical locks and standard closers and expands into more modern applications like electronic readers, e-locks, touchless actuators, and software-based services that work alongside these digital-age solutions, its growth story could add a few chapters. Allegion has always been a steady-Eddie compounder operating in a non-discretionary industry, so if Q2's accelerating growth persists -- especially as the company expands internationally -- it could prove to be an excellent stock to consider at today's reasonable valuation.
Source
Originally published at www.fool.com.