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Acuity Brands (AYI) Banks on Innovative Luminaries, Strategies

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Acuity Brands, Inc.’s (AYI - Free Report) innovative lighting control solutions and energy-efficient luminaries, along with strategic initiatives to transform the business bode well. Also, cost-control initiatives and focus on technologies are supporting growth.

For third-quarter fiscal 2021, it posted impressive earnings and revenues. The metrics surpassed the Zacks Consensus Estimate by 23.1% and 6.7%, respectively. Also, the top and bottom lines improved 15.9% and 42.8% year over year on strength in go-to-market channels, product portfolio and robust economy.

Year to date, the stock has surged 47.9% compared with the industry’s 36% growth. It has also outperformed other Building Products - Lighting players like LSI Industries Inc. (LYTS - Free Report) , Orion Energy Systems, Inc. (OESX - Free Report) and Energy Focus, Inc. (EFOI - Free Report) in the said period.

Zacks Investment ResearchImage Source: Zacks Investment Research

Let’s take a look at the factors that are influencing the Zacks Rank #2 (Buy) company’s performance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Factors Driving Growth

Acuity Brands keeps on diversifying the product portfolio through continuous innovation of energy-efficient luminaries and lighting control solutions. The company introduced a 254-nanometer technology to locally disinfect air in occupied and unoccupied spaces. In the fiscal first quarter, it had a major firmware release — Autonomous Bridging Technology or ABT — for nLight AIR products. The ABT is designed to increase the overall range of the nLight AIR system in networked environments by 300%, making connectivity more reliable.

Also, Acuity Brands focuses on expanding geographic borders via acquisitions and joint ventures. Recently, it announced the intention of acquiring a developer and manufacturer of lighting components — ams OSRAM’s North American Digital Systems business. Also, on May 18, Acuity Brands acquired Rockpile Ventures — an accelerator of Edge artificial intelligence startups.

In addition to owning an attractive business model and acquisitions, the company is working on various strategies to achieve consistent sales and earnings growth. It has reorganized the business into two units: Acuity Brands Lighting and Lighting Controls "ABL" and Intelligent Spaces Group "ISG". ABL includes lighting, lighting controls and components businesses, and ISG offers building management systems as well as location-aware applications including Distech and Atrius.

The company has undertaken various cost-saving actions like price increases and reduction in other costs that are expected to improve margins. Also, it is well positioned to mitigate cost pressure owing to the COVID-19 outbreak. For the fiscal third quarter, gross and adjusted operating margins improved 80 and 170 basis points on a year-over-year basis, respectively. The company’s margin expansion was attributed to more consistent and predictable cost control.

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