Acuity Brands (NYSE: AYI) designs
and produces indoor and outdoor lighting equipment for commercial, institutional, industrial, infrastructure and residential applications. Products are sold under such brand names as Lithonia Lighting, Holophane, Gotham, Carandini and American Electric Lighting to retail home improvement centers, electric utilities, municipalities, lighting showrooms and contractors. The firm employs approximately 7,000 associates and has operations in North America, Europe and Asia.
The company pleased investors last week, when it reported Q2 EPS of 82 cents and revenues of $482.6 million. Analysts had been expecting 68 cents and $470.2 million. Management attributed success to new products, more favorable pricing and improved productivity.
AYI shares
popped on the news and have since been consolidating the gain in a bullish "flag" pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the stock with three "strong buys". The AYI P/E ratio (12.80), PEG ratio (0.98), Price to Sales ratio (0.80), Price to Book ratio (3.55), Price to Cash Flow ratio (9.76), Price to Free Cash Flow ratio (11.08), EPS Growth rate (49.09%), Return on Assets (11.29%), Return on Investment (16.43%) and Return on Equity (27.77%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $34.04 and $66.89. A stop-loss of $39.90 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.
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