Will Allegion (ALLE) Beat Estimates Again in Its Next Earnings Report? – July 9, 2024

Looking for a stock that has consistently beaten earnings estimates and may be well-positioned to continue that streak into its next quarterly report? Allegion (ALL – Free Report), operating in the Zacks Security and Safety Services industry, may be a candidate worth considering.

The security device maker has a well-established reputation for beating earnings estimates, especially when looking at the past two reports. The company boasts an average earnings surprise of 8.47% over the past two quarters.

For the last quarter, Allegion was expected to post earnings of $1.41 per share but instead posted earnings of $1.55 per share, representing a surprise of 9.93%. For the previous quarter, the consensus estimate was $1.57 per share when the company actually posted earnings of $1.68 per share, representing a surprise of 7.01%.

Price and EPS are surprising

With this history, there has been a recent favorable revision to earnings estimates for Allegion. In fact, the stock’s Zacks Earnings ESP (Expected Surprise Prediction) is positive, which is a great indicator of an earnings beat, especially when paired with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better deliver a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat consensus estimates could be as many as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a revision of the Zacks Consensus definition that is related to revision. The idea is that the analysts revising their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other contributors to the consensus had previously predicted.

Allegion currently has an Earnings ESP of +1.42%, suggesting that analysts have become bullish on the near-term earnings potential. When we combine this positive Earnings ESP with the stock’s Zacks Rank #2 (Buy), it shows that another beat is likely just around the corner.

However, investors should remember that a negative Earnings ESP reading does not indicate a failure to achieve profits, but a negative value reduces the predictive power of this indicator.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock growth. On the other hand, some stocks can maintain their position even if they end up missing consensus estimates.

For this reason, it is very important to check a company’s Earnings ESP before its quarterly release to increase your chances of success. Make sure you use our Earnings ESP Filter to discover the best stocks to buy or sell before they are released.