Bringing Acuity Brands Stock Fundamentals to Light

AYI had a rough January

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Acuity Brands, Inc. (NYSE:AYI) announced on Jan. 12 that it is expanding its collaboration with Microsoft (MSFT) to bring new capabilities to its smart lighting, lighting controls, and building automation solutions. The company said its goal is to avoid 100m metric tons of carbon emissions through this extended partnership as the result of projected sales through 2030. 

The announcement did very little to move shares, however, and in fact AYI wound up caving to pressure at its formerly supportive 50-day moving average. The stock broke below another former level of support at the 100-day moving average just a few session later. On the bright side, AYI looks to have staged a bounce off the $185 level, which sits near its pre-bull gap highs. Plus, the security boasts a 55% 12-month lead. 

ayi feb 1

Options traders have taken a bearish stance. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AYI sports a 10-day put/call volume ratio of 1.00, which stands higher than 78% of readings from the past year. What's more, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.90 stands in the 90th percentile of its annual range. This means both short- and long-term traders are picking up puts at a quicker-than-usual clip right now. 

From a fundamental point of view, AYI is generally average by most metrics. The stock's valuation is slightly above the standard, trading at a price-earnings ratio of 20.93 and a price-sales ratio of 1.94. AYI also has a forward price-earnings ratio of 17.24, indicating a fairer value. Furthermore, the industrial tech brand holds a manageable balance sheet with $504 million in cash and $554.1 million in total debt.

However, Acuity Brands’ top- and bottom-line growth rate has been rather inconsistent in recent years. The company experienced a 10% decline in revenues and a 29% decrease in net income between fiscal 2018 and fiscal 2020. Nonetheless, Acuity Brands has nearly recovered from those declines over the past two years, growing revenues and net income 8% and 35%, respectively since fiscal 2020. In addition, AYI is estimated to grow revenues by 5.3% and earnings by 8.23% in 2022. As an end result, Acuity Brands stock's unremarkable fundamentals offer investors very little upside potential.


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