Allegion plc (NYSE:ALLE): What Does The Future Look Like?

In December 2018, Allegion plc (NYSE:ALLE) announced its earnings update. Overall, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 2.8% next year against the higher past 5-year average growth rate of 29%. With trailing-twelve-month net income at current levels of US$435m, we should see this rise to US$447m in 2020. Below is a brief commentary around Allegion’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Allegion

Exciting times ahead?

The view from 10 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of ALLE’s earnings growth over these next few years.

NYSE:ALLE Past and Future Earnings, April 4th 2019
NYSE:ALLE Past and Future Earnings, April 4th 2019

This results in an annual growth rate of 6.1% based on the most recent earnings level of US$435m to the final forecast of US$524m by 2022. This leads to an EPS of $5.21 in the final year of projections relative to the current EPS of $4.58. In 2022, ALLE’s profit margin will have expanded from 16% to 17%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Allegion, I’ve put together three relevant factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Allegion worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Allegion is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Allegion? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.