Acuity Brands, Inc. (AYI - Snapshot Report), which provides lighting solutions for both indoor and outdoor applications, delivered disappointing results for its fiscal 2013 first quarter on January 8. Both sales and earnings per share came in well below the Zacks Consensus Estimates for the quarter, prompting a flurry of negative estimate revisions. It is a Zacks Rank #5 (Strong Sell) stock.
First quarter net sales came in at $481.1 million, well short of the $502.0 million consensus. The adjusted gross profit margin contracted 40 basis points to 40.4%, due primarily to an increase in expenses associated with new product introductions and higher manufacturing costs. Adjusted EPS declined slightly to 69 cents, missing the Zacks Consensus Estimate by 11 cents (14%). It was the company's second straight earnings miss.
Earnings estimates fell considerably for both 2013 and 2014 following the Q1 miss, sending the stock to a Zacks Rank #5 (Strong Sell). The 2013 Zacks Consensus Estimate is now $3.24, down from $3.51 thirty days ago. The 2014 consensus is currently $3.95, down from $4.15 over the same period. The Zacks Industry Rank, which is based on the Zacks Rank, isn't very encouraging either. The 'Building Products-Lighting FX' industry ranks in the bottom 3% of all industries (259 out of 265).
In addition to negative earnings momentum, shares look pricey too. The stock trades at 20x forward earnings, well ahead of the industry median of 13x and its ten-year median of 15x. Acuity also carries a long-term 'Underperform' Zacks Recommendation.
Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.