Take a Closer Look at Acuity Brands Stock Before Earnings

How much more upside potential does AYI have?

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Acuity Brands, Inc. (NYSE:AYI) is an American industrial technology company. The company offers building management systems, lighting, lighting controls, and location-aware applications. Acuity Brands has operations across North America, Europe, and Asia. Acuity Brands employs approximately 11,000 associates to help design, manufacture, and bring products and services to the lighting and building management markets. At last check, AYI was up 0.3% at $145.

AYI has seen notably strong growth over the past week of trading. Specifically, in this time period, shares of Acuity Brands stock have moved 10% higher. AYI has also increased 21% year-to-date. Acuity Brands stock is also up about 76% year-over-year, and has increased over 100% since its May low of $70.55. Shares of AYI are also just off this morning's fresh two-year high of $148.63, with long-term support coming from the 50-day moving average.

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On March 25, Acuity Brands declared a quarterly dividend of $0.13 per share. The dividend is payable on May 3 to shareholders. Acuity Brands stock has a forward dividend of $0.52 and a dividend yield of 0.36%. Furthermore, Acuity Brands is scheduled to release its fiscal second-quarter earnings before the market opens on Wednesday, March 31.

Acuity Brands has managed to outperform earnings expectations on three of its last four earnings reports. For the second quarter of 2020, AYI missed analyst estimates by a margin of $0.06 and reported an earnings per share (EPS) of $1.84. For the third quarter of 2020, Acuity Brands increased its EPS to $1.94 and outperformed expectations by a significant margin of $0.72. For the fourth quarter of 2020, Acuity Brands posted another increase in earnings, rising to $2.35 per share. The company also beat estimates by a margin of $0.32. In the most recent quarterly report, Acuity Brands posted an EPS of $2.03 and beat expectations by $0.19.

From a fundamental point of view, Acuity Brands stock has a decent valuation, but has struggled to grow its revenues and net income in recent years. In fiscal 2020, the company's revenues fell nearly $350 million, or 9.5%, and that followed a slight decrease in fiscal 2019 as well. Moreover, Acuity Brands’ net income fell $70 million in fiscal 2020, equating to a massive 25% decrease. In fiscal 2019, the company also had a 5.5% reduction in net profits.

Overall, Acuity Brands stock is trading at a discount for what it could possibly produce at the moment. Acuity Brands’ biggest issue is whether the company will continue its recent downward trajectory. This upcoming earnings report should be a great indicator for the company’s future performance potential.

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