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Acuity Brands (AYI) Down 2.9% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Acuity Brands (AYI - Free Report) . Shares have lost about 2.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Acuity Brands due for a breakout? 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 drivers.

Acuity Brands' Q4 Earnings and Revenues Beat Estimates

Acuity Brands, Inc. reported fourth-quarter fiscal 2018 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Earnings surpassed the consensus mark for the second straight quarter, while revenues beat the same for the third successive quarter.

Adjusted earnings of $2.68 per share surpassed the consensus estimate of $2.63 by 1.9%. Also, earnings increased 5% on a year-over-year basis. The upside can be attributed to increase in net sales, driven by growth in the volume of Atrius-based luminaires along with Holophane solutions.

Sales

Net sales during the fourth quarter were $1.06 billion, beating the Zacks Consensus Estimate of $1.02 million by 4.2%. Also, the reported figure increased 11% year over year.

The upside can be attributed to 13% increase in volume, as well as a 1% favorable impact from acquisitions and foreign exchange rates. These were partially overshadowed by a 3% net unfavorable change in product prices as well as mix of products sold ("price/mix"). Notably, for the first time, the company reported net sales of more than $1 billion.

Operating Highlights

Adjusted gross profit margin was 39% in the quarter under review, down 350 bps on a year-over-year basis.

Adjusted selling, distribution and administrative or SG&A expenses were 24.4% of net sales, up 30 bps from 24.1% in the year-ago quarter. Adjusted operating margin was 14.5%, down 390 bps year over year.

Financials

Cash and cash equivalents, as of Aug 31, 2018, were $129 million, down $182 million from fiscal 2017.

Net cash provided by operating activities was $353 million in fiscal 2018 compared with $337 million a year ago.

Fiscal 2018 Highlights

Net sales were up 5% to $3.68 billion year over year.

Adjusted operating profit declined 11% to $528 million from the prior-year level of $592 million.

Adjusted earnings grew 5% to $8.84 from $8.45 in the year-ago period.

Outlook

Despite reporting better-than-expected results in the fourth quarter of fiscal 2018, the company’s shares plunged post the earnings release, after the company said that it is “cautiously optimistic for fiscal 2019”. Per third-party forecasts and leading indicators, the North American lighting market is likely to increase in low-single digits in fiscal 2019.

Acuity Brands expects that a number of actions undertaken during the past several months will overshadow inflationary cost pressures and improve productivity in the first quarter of fiscal 2019.

The company anticipates annual tax rate of approximately 25%. Additionally, capital expenditure is expected to be nearly 1.5% of total net sales.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Acuity Brands has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Acuity Brands has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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