Have you been paying attention to shares of Acuity Brands (
AYI Quick Quote AYI - Free Report) ? Shares have been on the move with the stock up 25.6% over the past month. The stock hit a new 52-week high of $173.91 in the previous session. Acuity Brands has gained 41.5% since the start of the year compared to the 21.7% move for the Zacks Construction sector and the 34.7% return for the Zacks Building Products - Lighting industry. What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 31, 2021, Acuity Brands reported EPS of $2.12 versus consensus estimate of $1.69 while it missed the consensus revenue estimate by 1.05%.
For the current fiscal year, Acuity Brands is expected to post earnings of $9.1 per share on $3.32 billion in revenues. This represents a 10.04% change in EPS on a -0.09% change in revenues. For the next fiscal year, the company is expected to earn $9.89 per share on $3.51 billion in revenues. This represents a year-over-year change of 8.64% and 5.67%, respectively.
Acuity Brands may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Acuity Brands has a Value Score of C. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 18.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 17.3X versus its peer group's average of 17.3X. Additionally, the stock has a PEG ratio of 1.88. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Acuity Brands currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Acuity Brands passes the test. Thus, it seems as though Acuity Brands shares could have a bit more room to run in the near term.
How Does Acuity Brands Stack Up to the Competition?
Shares of Acuity Brands have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Advanced Drainage Systems (
WMS Quick Quote WMS - Free Report) , Eagle Materials ( EXP Quick Quote EXP - Free Report) , and TopBuild ( BLD Quick Quote BLD - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 44% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Acuity Brands, even beyond its own solid fundamental situation.