If a CEO is buying company stock, it’s often worth investigating the stock further. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts and portfolio managers when it comes to revenue and earnings trends.
Here, we are going to highlight a large CEO stock purchase at Allegion PLC (ALLE:US). Allegion provides security products for the home and businesses. The company, which comprises 31 global brands, focuses on mechanical products such as locks and steel doors and frames but also combines this with electronic solutions. It’s listed on the New York Stock Exchange and currently has a market capitalization of $9.38 billion.
Insider buying at Allegion
Our insider transaction data shows that on October 28, the President/CEO of Allegion, John Stone, purchased 12,500 ALLE shares at a price of $104.45 per share. This cost the insider around $1.3 million and increased his holding by about 24%.
This trade is worth highlighting for a couple of reasons.
Firstly, Mr. Stone has spent a significant amount of money on stock, which suggests he strongly believes the shares are undervalued. He has also lifted his holding by a notable amount in percentage terms.
Secondly, the President/CEO has an impressive track record. Prior to joining Allegion, he was at Deere & Company for 20 years. Whilst at Deere, he demonstrated an ability to improve profitability and drive innovation. In his last role before joining Allegion, he served as President of Deere Worldwide Construction, Forestry and Power Systems business, overseeing a business that reported nearly $11.4 billion in revenue in 2021.
Impressive Q3 results
Allegion produced impressive Q3 numbers that beat analysts’ expectations.
For the quarter, revenue came in at $913.70 million versus the consensus forecast of $870 million. Meanwhile, adjusted earnings per share were $1.64, versus analysts’ forecast of $1.47. Adjusted operating margin of 21% was 100 basis points higher than the figure achieved in Q3 2021.
Full-year 2022 revenue growth outlook of 13 to 14% was affirmed. However, organic revenue growth forecasts for the full year were raised to a range of 9.5% to 10.5%. The range for full-year EPS was also revised to between $4.90 and $5.00.
“I am extremely impressed with the resilience of our people and the strong customer relationships we have built over many years. The hard work by the entire Allegion team delivered outstanding operational performance in the quarter, and we look to build on this momentum going forward, creating seamless access and a safer world,” said Mr. Stone.
Given these encouraging Q3 results, we see the insider buying here as bullish.