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Acuity Brands (AYI) Up 13.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Acuity Brands (AYI - Free Report) . Shares have added about 13.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Acuity Brands due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Acuity Brands, Inc. reported mixed results for second-quarter fiscal 2021, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the estimate for the fourth straight quarter. The top line declined on a year-over-year basis owing to a drop in retail sales and corporate account sales. However, the bottom line improved from the year-ago quarter.
With respect to results, Neil Ashe, president and chief executive officer of Acuity Brands, said, “I am very proud of our team for another quarter of solid performance. We continue to see signs of a modest recovery in the wider market, while our margin expansion reflects the hard work of our associates who continue to control costs in a more consistent and predictable way.”
Delving Deeper
The company reported adjusted earnings of $2.12 per share that comfortably surpassed the Zacks Consensus Estimate of $1.69 by 25.4%. Also, the said metric grew 15.2% from the year-ago quarter’s reported figure.
Net sales during the quarter totaled $776.6 million, which missed the consensus mark of $784.9 million. Also, the reported figure declined 5.8% from $824.2 million in the prior-year quarter. The downside was caused by nearly a 24.3% decline in retail sales owing to the pandemic in the prior year combined with a current-quarter customer inventory rebalancing. Moreover, corporate account sales decreased 51.3% mainly due to lower shipments as larger retailers continue to defer unnecessary repairs. However, sales through the independent sales network and direct sales network were more or less flat.
Operating Highlights
Gross margin came in at 43.4%, up 170 basis points on a year-over-year basis. Gross profit margin increased primarily due to ongoing product and productivity improvements and efficient cost management.
Adjusted selling, distribution and administrative or SD&A expenses came in at $227.8 million (29.3% of net sales) compared with $242.3 million (29.4% of net sales) in the prior-year quarter, improving 10 basis point on a year-over-year basis. Adjusted operating profit for the second quarter of fiscal 2021 was $108.9 million compared with $101.7 million in the second quarter of fiscal 2020. Adjusted operating profit margin came in at 14% compared with 12.3% in the prior-year quarter.
Financials
As of Feb 28, 2021, Acuity Brands had cash and cash equivalents of $498.7 million compared with $560.7 million at the end of fiscal 2020. Cash provided by operating activities at the end of the second quarter of fiscal 2021 totaled $212.6 million, down from $214.7 million a year ago.
Outlook
The company is cautiously optimistic about the results for the rest of fiscal 2021, which is attributable to improvements in the end markets. With its product portfolio and strong go-to-market, it expects to deliver robust top-line performance. Although the company is uncertain about the economic environment due to the pandemic, it will continue to invest in technology expansion with the intention of becoming a more versatile entity.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 14.79% due to these changes.
VGM Scores
Currently, Acuity Brands has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Acuity Brands has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Acuity Brands (AYI) Up 13.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Acuity Brands (AYI - Free Report) . Shares have added about 13.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Acuity Brands due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Acuity Brands (AYI - Free Report) Q2 Earnings Top, Revenues Lag
Acuity Brands, Inc. reported mixed results for second-quarter fiscal 2021, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the estimate for the fourth straight quarter. The top line declined on a year-over-year basis owing to a drop in retail sales and corporate account sales. However, the bottom line improved from the year-ago quarter.
With respect to results, Neil Ashe, president and chief executive officer of Acuity Brands, said, “I am very proud of our team for another quarter of solid performance. We continue to see signs of a modest recovery in the wider market, while our margin expansion reflects the hard work of our associates who continue to control costs in a more consistent and predictable way.”
Delving Deeper
The company reported adjusted earnings of $2.12 per share that comfortably surpassed the Zacks Consensus Estimate of $1.69 by 25.4%. Also, the said metric grew 15.2% from the year-ago quarter’s reported figure.
Net sales during the quarter totaled $776.6 million, which missed the consensus mark of $784.9 million. Also, the reported figure declined 5.8% from $824.2 million in the prior-year quarter. The downside was caused by nearly a 24.3% decline in retail sales owing to the pandemic in the prior year combined with a current-quarter customer inventory rebalancing. Moreover, corporate account sales decreased 51.3% mainly due to lower shipments as larger retailers continue to defer unnecessary repairs. However, sales through the independent sales network and direct sales network were more or less flat.
Operating Highlights
Gross margin came in at 43.4%, up 170 basis points on a year-over-year basis. Gross profit margin increased primarily due to ongoing product and productivity improvements and efficient cost management.
Adjusted selling, distribution and administrative or SD&A expenses came in at $227.8 million (29.3% of net sales) compared with $242.3 million (29.4% of net sales) in the prior-year quarter, improving 10 basis point on a year-over-year basis. Adjusted operating profit for the second quarter of fiscal 2021 was $108.9 million compared with $101.7 million in the second quarter of fiscal 2020. Adjusted operating profit margin came in at 14% compared with 12.3% in the prior-year quarter.
Financials
As of Feb 28, 2021, Acuity Brands had cash and cash equivalents of $498.7 million compared with $560.7 million at the end of fiscal 2020. Cash provided by operating activities at the end of the second quarter of fiscal 2021 totaled $212.6 million, down from $214.7 million a year ago.
Outlook
The company is cautiously optimistic about the results for the rest of fiscal 2021, which is attributable to improvements in the end markets. With its product portfolio and strong go-to-market, it expects to deliver robust top-line performance. Although the company is uncertain about the economic environment due to the pandemic, it will continue to invest in technology expansion with the intention of becoming a more versatile entity.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 14.79% due to these changes.
VGM Scores
Currently, Acuity Brands has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Acuity Brands has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.