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Acuity Brands (AYI) Q2 Earnings: Is Disappointment in Store?
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Acuity Brands, Inc. (AYI - Free Report) is slated to announce second-quarter fiscal 2017 results on Apr 4, before the opening bell.
Last quarter, the company posted a negative earnings surprise of 8.74%. The company clocked negative earnings surprises in three of the last four quarters, at an average of 0.96%.
Acuity Brands’ shares have lost 11.7% so far this year, underperforming the Zacks classified Building Products - Lighting industry’s 11.1% decline.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Acuity Brands is the leader in the North American nonresidential lighting fixture market, primarily because of its Lithonia brand. The company remains upbeat on its addressable market or the North American market and expects it to increase 30--35% over the next several years buoyed by energy efficiency-driven relight market. Overall, the company expects demand in its end-markets to continue to be strong over the next several years.
However, the company has been facing issues in recent times with lower margins. This is mainly due to lower shipments or sales volume owing to soft demand. This is likely to impact in the upcoming quarter as well.
It is to be noted that Acuity Brands’ adjusted gross profit margin in the first quarter of fiscal 2017 declined 100 basis points (bps) compared with the prior year. The decline was primarily due to weaker-than-expected net sales volume. Additionally, factors like higher manufacturing costs, mainly due to short-term production challenges related to product introductions, a rise in quality costs, and expected increases in certain employee wages also added to the woes. Moreover, the company’s adjusted operating profit margin declined 30 bps year over year.
The company believes that lower demand is likely to continue in the second quarter. Also, order activity in Dec 2016 reflected growth at a slower pace than what was witnessed over the past several quarters. Additionally, the fiscal second quarter is typically the weakest due to normal seasonality and the potential for year-end inventory rebalancing by certain customers.
For the quarter, the Zacks Consensus Estimate for earnings stands at $1.70, reflecting a 0.2% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $825 million, implying 6.1% growth.
What Our Model Indicates
Our proven model does not conclusively show that Acuity Brands is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Acuity Brands is -0.59%, because the Most Accurate estimate stands at $1.69, while the Zacks Consensus Estimate is pegged at $1.70. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Acuity Brands’ Zacks Rank #4 (Sell) decreases the predictive power of ESP and its negative ESP of 0.59% makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the construction sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +1.31% and a Zacks Rank #2. The company is expected to report its quarterly results on Apr 19.
Owens Corning Inc (OC - Free Report) has an Earnings ESP of +3.39% and a Zacks Rank #1. The company is expected to report its quarterly results on Apr 26.
Trex Company, Inc. (TREX - Free Report) has an Earnings ESP of +2.27% and a Zacks Rank #3. The company is expected to report its quarterly results on May 9.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
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Acuity Brands (AYI) Q2 Earnings: Is Disappointment in Store?
Acuity Brands, Inc. (AYI - Free Report) is slated to announce second-quarter fiscal 2017 results on Apr 4, before the opening bell.
Last quarter, the company posted a negative earnings surprise of 8.74%. The company clocked negative earnings surprises in three of the last four quarters, at an average of 0.96%.
Acuity Brands’ shares have lost 11.7% so far this year, underperforming the Zacks classified Building Products - Lighting industry’s 11.1% decline.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Acuity Brands is the leader in the North American nonresidential lighting fixture market, primarily because of its Lithonia brand. The company remains upbeat on its addressable market or the North American market and expects it to increase 30--35% over the next several years buoyed by energy efficiency-driven relight market. Overall, the company expects demand in its end-markets to continue to be strong over the next several years.
However, the company has been facing issues in recent times with lower margins. This is mainly due to lower shipments or sales volume owing to soft demand. This is likely to impact in the upcoming quarter as well.
It is to be noted that Acuity Brands’ adjusted gross profit margin in the first quarter of fiscal 2017 declined 100 basis points (bps) compared with the prior year. The decline was primarily due to weaker-than-expected net sales volume. Additionally, factors like higher manufacturing costs, mainly due to short-term production challenges related to product introductions, a rise in quality costs, and expected increases in certain employee wages also added to the woes. Moreover, the company’s adjusted operating profit margin declined 30 bps year over year.
The company believes that lower demand is likely to continue in the second quarter. Also, order activity in Dec 2016 reflected growth at a slower pace than what was witnessed over the past several quarters. Additionally, the fiscal second quarter is typically the weakest due to normal seasonality and the potential for year-end inventory rebalancing by certain customers.
For the quarter, the Zacks Consensus Estimate for earnings stands at $1.70, reflecting a 0.2% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $825 million, implying 6.1% growth.
What Our Model Indicates
Our proven model does not conclusively show that Acuity Brands is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Acuity Brands is -0.59%, because the Most Accurate estimate stands at $1.69, while the Zacks Consensus Estimate is pegged at $1.70. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Acuity Brands’ Zacks Rank #4 (Sell) decreases the predictive power of ESP and its negative ESP of 0.59% makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the construction sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +1.31% and a Zacks Rank #2. The company is expected to report its quarterly results on Apr 19.
Owens Corning Inc (OC - Free Report) has an Earnings ESP of +3.39% and a Zacks Rank #1. The company is expected to report its quarterly results on Apr 26.
Trex Company, Inc. (TREX - Free Report) has an Earnings ESP of +2.27% and a Zacks Rank #3. The company is expected to report its quarterly results on May 9.
Acuity Brands Inc Price and EPS Surprise
Acuity Brands Inc Price and EPS Surprise | Acuity Brands Inc Quote
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>