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Why Is Acuity Brands (AYI) Up 4.1% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Acuity Brands Inc (AYI - Free Report) . Shares have added about 4.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 Lags Q2 Earnings Estimates, Margins Down
Acuity Brands, Inc. reported second-quarter fiscal 2017 adjusted earnings of $1.65 per share, missing the Zacks Consensus Estimate of $1.70 by 2.9%. Earnings were adjusted by excluding 12 cents of non-recurring items.
Without the above adjustment, the company reported adjusted diluted earnings of $1.77 per share, down 1.7% from $1.80 a year ago.
Sales
Net sales during the quarter were $804.7 million, falling short of the Zacks Consensus Estimate of $825.01 million by 2.5%. The reported figure, however, increased 3.5% year over year.
The upside was mainly attributable to a 4% increase in volume and a 1% rise from acquisitions. These were partly offset by a net unfavorable change in product prices and mix of products sold (“price/mix”) of approximately 1%.
Sales volume improved across most key product categories and sales channels in the U.S. and Canada, while sales declined in both Europe and Mexico.
Sales of LED-based products increased approximately 20% on a year-over-year basis and represented approximately two-thirds of total net sales in the second quarter.
Operating Highlights
Adjusted gross profit margin was 41.7% in the second quarter, reflecting a decrease of 180 basis points (bps) year over year owing to higher manufacturing expenses, resulting from increased wages and benefits, inbound freight costs and quality costs.
Adjusted operating margin was 15.4%, down 100 bps year over year.
Adjusted Selling, Distribution and Administrative expenses were $227.8 million or 26.3% of quarterly net sales, compared with $230.1 million or 27.1% a year ago.
Financials
Cash and cash equivalents, as of Feb 28, 2016, were $463.2 million, up from $413.2 million in fiscal 2016.
Net cash provided by operating activities was $71.6 million in the first half of fiscal 2017, down 40.1% from $119.5 million a year ago.
The company expects the North American lighting market to return to growth in fiscal 2018. It also expects to continue to outperform growth rates of markets it serves by executing strategies focused on opportunities for new construction and renovation projects, expansion into underpenetrated geographies and channels, and growth from continued introduction of lighting and building management.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been seven revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 11.6% due to these changes.
At this time, Acuity Brands' stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.
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Why Is Acuity Brands (AYI) Up 4.1% Since the Last Earnings Report?
A month has gone by since the last earnings report for Acuity Brands Inc (AYI - Free Report) . Shares have added about 4.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 Lags Q2 Earnings Estimates, Margins Down
Acuity Brands, Inc. reported second-quarter fiscal 2017 adjusted earnings of $1.65 per share, missing the Zacks Consensus Estimate of $1.70 by 2.9%. Earnings were adjusted by excluding 12 cents of non-recurring items.
Without the above adjustment, the company reported adjusted diluted earnings of $1.77 per share, down 1.7% from $1.80 a year ago.
Sales
Net sales during the quarter were $804.7 million, falling short of the Zacks Consensus Estimate of $825.01 million by 2.5%. The reported figure, however, increased 3.5% year over year.
The upside was mainly attributable to a 4% increase in volume and a 1% rise from acquisitions. These were partly offset by a net unfavorable change in product prices and mix of products sold (“price/mix”) of approximately 1%.
Sales volume improved across most key product categories and sales channels in the U.S. and Canada, while sales declined in both Europe and Mexico.
Sales of LED-based products increased approximately 20% on a year-over-year basis and represented approximately two-thirds of total net sales in the second quarter.
Operating Highlights
Adjusted gross profit margin was 41.7% in the second quarter, reflecting a decrease of 180 basis points (bps) year over year owing to higher manufacturing expenses, resulting from increased wages and benefits, inbound freight costs and quality costs.
Adjusted operating margin was 15.4%, down 100 bps year over year.
Adjusted Selling, Distribution and Administrative expenses were $227.8 million or 26.3% of quarterly net sales, compared with $230.1 million or 27.1% a year ago.
Financials
Cash and cash equivalents, as of Feb 28, 2016, were $463.2 million, up from $413.2 million in fiscal 2016.
Net cash provided by operating activities was $71.6 million in the first half of fiscal 2017, down 40.1% from $119.5 million a year ago.
The company expects the North American lighting market to return to growth in fiscal 2018. It also expects to continue to outperform growth rates of markets it serves by executing strategies focused on opportunities for new construction and renovation projects, expansion into underpenetrated geographies and channels, and growth from continued introduction of lighting and building management.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been seven revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 11.6% due to these changes.
Acuity Brands Inc Price and Consensus
Acuity Brands Inc Price and Consensus | Acuity Brands Inc Quote
VGM Scores
At this time, Acuity Brands' stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.