Analyst Note| Brian Bernard, CFA, CPA |
Allegion's second-quarter sales and earnings growth exceeded our expectations, as the wide-moat-rated firm's end markets have rebounded faster than we had anticipated. Allegion's reported revenue increased nearly 27% year over year on a pandemic-affected comparison (second-quarter 2020 revenue was down 19% year over year). More importantly, Allegion's top line has returned to prepandemic levels, with second-quarter sales 2% above the same period in 2019. Adjusted operating margin expanded 70 basis points year over year to 19.6% due to much improved international segment profitability, which has benefited from recent restructuring. Increased operating income was the primary driver of Allegion's 44% adjusted EPS growth to $1.32 per share.