Allegion plc ALLE is scheduled to release fourth-quarter 2024 results on Feb. 18, before market open.

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The Zacks Consensus Estimate for ALLE’s fourth-quarter revenues is pegged at $939.2 million, indicating growth of 4.7% from the prior-year quarter’s figure. The consensus mark for earnings is pinned at $1.74 per share, which has edged down a penny in the past 30 days. However, the figure indicates growth of 3.6% from the year-ago quarter's figure.

The company delivered better-than-expected results in each of the trailing four quarters, the earnings surprise being 9.9% on average.  In the last reported quarter, its bottom line beat the consensus estimate by 11.9%.

Let us see how things have shaped up for Allegion this earnings season.

Factors Likely to Shape ALLE’s Quarterly Performance

The company has been witnessing strong momentum in the Allegion Americas segment, driven by stable demand across the education, healthcare, government, hospitality and retail end markets. The increase in demand for residential products is also anticipated to have augmented its top-line performance in the fourth quarter. We expect revenues from the segment to increase 4.6% year over year to $736.7 million.

Increased adoption of advanced technologies and solutions in the electronics security products market, such as wireless locks and mobile-enabled smart locks, is expected to have boosted the Allegion International segment’s performance. We expect revenues from the segment to increase 4.6% year over year to $201.6 million.

Allegion has always been focused on expanding its product offerings and market presence through buyouts.  In June 2024, the company acquired Krieger Specialty Products. The addition of Krieger’s expertise in specialty solutions enabled ALLE to strengthen its door and frame portfolio. Also, in the same month, it purchased Unicel Architectural Corp. The inclusion of Unicel’s proficiency in glass and building envelope solutions expanded its product portfolio within the non-residential business. Both the acquired businesses have been incorporated into the Allegion Americas segment.

Its acquisition of Dorcas in March 2024 strengthened its security products portfolio and boosted its presence in the healthcare and education sectors. Also, the buyout of Boss Door Controls in February last year expanded its U.K. business with a complementary product portfolio and broader channel access. Both these acquisitions have been integrated into the Allegion International segment. The buyouts are expected to have boosted ALLE’s top line in the quarter.

However, escalating operating costs, owing to increased material costs and investments in new product, channel development and growth initiatives, are likely to have impacted the company’s bottom line. We expect ALLE’s cost of sales to increase 4.2% year over year and adjusted operating margin to decline 70 basis points to 21.3% in the fourth quarter.

Also, given the company’s extensive geographic presence, its operations are subject to foreign exchange headwinds. A stronger U.S. dollar is likely to have hurt Allegion's overseas business.

Earnings Whispers for Allegion

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 $1.74. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: ALLE presently carries a Zacks Rank of 3.

Stocks More LIkely to Beat Expectations

Here are three companies, which according to our model, have the right combination of elements to post an earnings beat this season.

Deere & Company DE has an Earnings ESP of +1.12% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is slated to release its first-quarter fiscal 2025 (ended January 2025) results on Feb. 13. DE’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 13.5%.

Lincoln Electric Holdings, Inc. LECO has an Earnings ESP of +1.17% and a Zacks Rank of 3 at present. The company is scheduled to release fourth-quarter results on Feb. 13.

LECO’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 5.4%.

Flowserve Corporation FLS has an Earnings ESP of +2.60% and a Zacks Rank of 3 at present. The company is slated to release fourth-quarter results on Feb. 18.

Flowserve’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark in one, the average surprise being 10.8%.

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