Daily Stock Watch: Acuity Brands (AYI) Share Price Climbs

By Kirsteen Mackay


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AYI stock is rising on earnings beat. But, is Acuity Brands (NYSE: AYI) a good investment in the current economic climate?

Why is AYI stock Rising?

Acuity Brands (NYSE: AYI) reports fiscal 2022 Q4 and full-year results today. The company delivered a strong full-year performance with record net sales delivering operating profit and diluted EPS growth.

Acuity's results beat FactSet analyst estimates. Full-year EPS of $12.83 beat consensus estimates of $12.53, and revenues of $4bn beat consensus of $3.97bn. The AYI share price is up 8% in early trading. 

What Does Acuity Brands Do?

Acuity Brands, Inc. designs, produces and distributes a full range of indoor and outdoor lighting and control systems. Indeed, it is the largest lighting manufacturer in North America.

The company uses technology to solve problems in spaces and light. Through its two business segments, Acuity Brands Lighting and Lighting Controls (ABL) and the Intelligent Spaces Group (ISG), it designs, manufactures, and commercializes products and services that make a valuable difference in people's lives.

Acuity Brands is a market-leading industrial technology company offering products for commercial and institutional, industrial, infrastructure, and residential applications. Acuity Brands manufactures lighting products worldwide. The company was founded in 2001 and is based in Atlanta, Georgia, with operations across North America, Europe, and Asia. The company is powered by approximately 13,500 dedicated and talented associates.

The team is motivated to make customer-focused lighting efficiencies that are reflected in its business strategy, steadily increasing its market share while delivering superior shareholder returns. Indeed, during the full year of fiscal 2022, Acuity Brands repurchased approximately three million shares of common stock for a total of $512m.

Q4 Highlights

  • Net Sales of $1.11bn

  • Increased Net Sales by 12% Y/Y

  • Gross profit: $462.5m (up 10% Y/Y)

  • Operating profit: $149.6m (up 12.7% Y/Y)

  • Diluted EPS: $3.48

  • Increased Diluted EPS by 28% Y/Y

  • Deployed Additional $107m to Share Repurchases

Full-Year Highlights

  • Net Sales of $4.01bn (up 15.7% Y/Y)

  • Increased Net Sales by 16% Y/Y

  • Gross profit: $1.7bn (up 13.4% Y/Y)

  • Operating profit: $509.7m (up 19.2% Y/Y)

  • Increased Diluted EPS by 32% Y/Y

  • Deployed Additional $512m to Share Repurchases

Neil Ashe, Chairman, President and CEO of Acuity Brands, Inc., said:

We continued to deliver strong results in the fiscal fourth quarter, concluding what has been a very good fiscal 2022,

We had strong demand across our end markets, and we demonstrated our ability to capture price and drive volume through product vitality and service in both our lighting and spaces businesses throughout this fiscal year.

How Does Acuity Brands Make Money?

Acuity Brands makes money selling a wide range of lighting products to residential and commercial customers. It has two divisions, its Lighting and Lighting Controls (ABL) division and its Intelligent Spaces Group division (ISG). 

In Q4, Acuity made $162m in adjusted operating profit from ABL and $15m from ISG.

The company sells 19 lighting brands, six lighting control brands, six components brands a two ISG brands. 

AYI Stock Financials

Over the past year, AYI stock has traded between $142.71 and $224.59. Today it trades at around $173. Year-to-date, the Acuity Brands stock price is down by -25.08%, largely in line with the S&P 500, which is down by -23.31% over the same period.

FactSet analysts have an Overweight rating on AYI stock with a target share price of $193.25.

AYI stock has a price-to-earnings ratio (P/E) of 15.4. Its price-to-book-value (P/BV) is 2.8. which is below the industry benchmark of 3.65. AYI stock comes with a dividend yield of 0.3%.

Acuity Brands Growth Potential

As part of its longer-term growth strategy Acuity Brands looks to aggressively deploy capital to grow the business and enter attractive new verticals. 

The company achieves growth through the development of innovative new products and services, including lighting, lighting controls, building management systems, and location-aware applications.

The company projects net sales of $4.1bn to $4.3bn in fiscal 2023. It may consider M&A and aims to maintain the dividend.

AYI Stock Risks

  • The company has been battling component challenges via the supply chain and is aiming for more normalized lead times.

  • Inflationary pressures remain.

  • Container and freight costs fluctuate, they're coming down, but volatility remains.

  • Economic strains are weighing on stocks.

Is AYI Stock a Good Investment?

Acuity Brands (NYSE: AYI) is displaying signs of strength and resilience as economic turmoil rages on. The stock comes with a small dividend, and the company has recently been conducting share buybacks which show its commitment to shareholder gains.

Acuity offers products that deliver value to customers and higher profits to the company, and that continues to be its aim going forward.

The AYI P/E does not appear overly expensive, and the stock offers a lot to like. If the economy is hard hit in the coming year, orders for lighting may not remain a top priority. However, for long-term investors, this could prove a resilient growth stock.

If you enjoyed our Acuity Brands coverage, you might like our recent Daily Stock Watch articles or IPO coverage.

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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