Acuity Brands Breaks Above 200 Day Moving Average, EPS Beat

Acuity Brands (AYI) stock has confirmed a break above its 200 day moving average on October 5, 2023, after the company reported an EPS beat but slight revenue miss.

Acuity Brands reported Q4 adjusted EPS of $3.97 versus the consensus estimate of $3.72. The company reported that Q4 revenue fell -9% yoy to $1B versus the consensus estimate of $1.02B.

“Our fiscal fourth quarter performance demonstrated excellent execution. Our focus on margin and cash generation led to increased adjusted operating profit marginIn the dynamic world of business, profitability is a fundamental metric that encapsulates a company's ability to generate earnings from its operations. Profit margins, expressed as... More and higher adjusted diluted earnings per shareEarnings per share (EPS) is a fundamental financial metric that provides valuable insights into a company's profitability. This widely used indicator helps investors and analysts g... More, despite a decline in sales in the lighting business,” stated Neil Ashe, Chairman, President and CEO of Acuity Brands. “This quarter concluded a successful year. We delivered strong financial performance, continued to improve our businesses and allocated capital effectively.”

There are indications that the strong EPS performance will last into FY24. While revenue was largely in line, AYI’s EPS guidance at its midpoint exceeded analyst expectations during the call. This is based on the presumption that due to circumstances in the Lighting macro environment, its ABL segment will produce sales in the low to mid-single digit range. As it continues to gain market share and expand internationally, AYI anticipates its ISG segment will grow in the mid-teens.

The only channel within the ABL segment to experience year over year growth was retail, which increased by 6 percent to $46.6 million. The Independent sales network, which is by far ABL’s largest channel, saw sales decline by 8.3% yoy to $676 million. According to AYI, consumers are purchasing less lighting and lighting controls. With the possibility of some improvement in the following year, AYI anticipates roughly the same market conditions in Lighting for the balance of this year.

On October 5, 2023, Wells Fargo analyst Joseph O’Dea raised the price target on Acuity Brands to $200 from $180 and kept an Overweight rating on the shares. The firm cites 2024 outlook ahead of expectations.

On October 5, 2023, Baird analyst Timothy Wojs raised the price target on Acuity Brands to $180 from $170 and kept a Neutral rating on the shares. Baird said its quarterly results showed encouraging margin performance despite choppy end markets as record-high gross margins drove EPS upside against lighter revenue, while providing modestly better-than-expected EPS guidance.

Acuity Brands is a company that specializes in lighting solutions and technology. The company designs, produces, and distributes a wide range of lighting fixtures, controls, systems, and components for commercial, industrial, and residential applications. They offer innovative lighting products under various renowned brands such as Lithonia Lighting, Juno, Gotham, and Sensor Switch. Acuity Brands provides energy-efficient and sustainable lighting solutions to enhance the aesthetics, functionality, and safety of different spaces. Additionally, they offer lighting controls and IoT (Internet of Things) enabled solutions to optimize energy usage and enable smart building management.