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Allegion (ALLE) Down More Than 7% in 3 Months: Here's Why

Allegion plc ALLE is persistently struggling with supply-chain constraints, increasing operating costs and foreign currency woes. Due to these headwinds, shares of ALLE have lost 7.3% in the past three months against the industry's increase of 3.6%.

Allegion is experiencing weakness in its businesses due to supply-chain challenges and shortages of electronic chips. In second-quarter 2022, its gross margin was down 293 basis points year over year, while the operating margin contracted 220 basis points. Labor, material and freight-related cost inflation are affecting ALLE’s margins.

High effective tax rates are also concerning for Allegion. For 2022, ALLE predicts a 13% rate, suggesting a rise from 7.5% recorded in 2021. The high tax rate is predicted to affect its earnings by 35 cents in the year.

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Allegion’s presence across diverse regions exposes it to various environmental laws and regulations in its operating countries. Adverse foreign-currency movements had an impact of 3% on its revenues in the second quarter of 2022. The same had an adverse impact of 10.9% on its International’s sales.

Zacks Rank and Stocks to Consider

Allegion currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:

Applied Industrial Technologies, Inc. AIT presently has a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 22.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

AIT’s earnings estimates have increased 6.7% for fiscal 2023 (ending June 2023) in the past 60 days. Its shares have risen 5.1% in the past three months.

Eaton Corporation plc ETN presently has a Zacks Rank #2 (Buy). ETN’s earnings surprise in the last four quarters was 1.4%, on average.

In the past 60 days, Eaton’s earnings estimates have increased 1.1% for 2022. The stock has rallied 5.4% in the past three months.

IDEX Corporation IEX presently has a Zacks Rank of 2. IEX’s earnings surprise in the last four quarters was 4.6%, on average.

In the past 60 days, IDEX’s earnings estimates have increased 1.1% for 2022. The stock has rallied 9% in the past three months.

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