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.
Other companies reporting quarterly results on Tuesday included the following:
Constellation Brands Inc. (NYSE: STZ): Third-quarter profit rose 11 percent, lifted by strong liquor sales, a growth in North American wine business, and acquisition of Svedka vodka. Profit for the quarter ended November 30 rose to $119.6 million, or 55 cents a share, from $107.8 million, or 45 cents a share, a year earlier. Analysts polled by Thomson Financial had expected 55 cents per share on revenue of $1.04 billion. However, Constellation lowered its full-year profit outlook, in part due to costs from its recent acquisition of Fortune Brands Inc.
Acuity Brands Inc. (NYSE: AYI): Fiscal 2008 first-quarter earnings fell 7 percent, as a restructuring charge offset higher pricing and increased sales. The company earned $31.1 million, or 72 cents per share, compared with $33.6 million, or 77 cents per share, in the same quarter a year ago. Analysts had expected profit of 82 cents per share on revenue of $500.6 million, according to analysts polled by Thomson Financial. Revenue increased 7% to $508.9 million, from $477.6 million a year ago. The special charge was related to planned actions to streamline operations as a result of the spin-off of Zep Inc.
MOST NOTEWORTHY: BAE Systems, VASCO Data Security, Salesforce.com, Tempur Pedic and Fidelity National were today's noteworthy upgrades:
Goldman added BAE Systems (OTC: BAESY) to its Conviction Buy List, as they believe the company's defensive growth characteristics will lead to outperformance.
Salesforce.com Inc (NYSE: CRM) was upgraded to Outperform from Market Perform at Piper to reflect the company's strong cash flow generation and the firm's belief that CRM is a core holding in the enterprise application market.
Citigroup upgraded shares of Tempur Pedic International Inc (NYSE: TPX) to Buy from Hold, as they believe double-digit sales growth and margin expansion will drive 25% EPS growth over the next few years.
It's been said that if the U.S. state of Georgia were an independent nation, it would have the 18th largest economy in world. The "Empire State of the South" ranked tenth in U.S. in per capita personal income in 2005, and has one of the fastest growing populations in the U.S. -- about a million additional people between 2000 and 2005. Its diverse industrial output ranges from peaches and peanuts, to textiles, food processing, and aircraft manufacturing, to publishing and tourism. Georgia is home to such corporate giants as Coca-Cola Co. (NYSE: KO); Delta Air Lines Inc. (NYSE: DAL); Home Depot Inc. (NYSE: HD); UPS (NYSE: UPS); Newell Rubbermaid Inc. (NYSE: NWL), and Equifax Inc. (NYSE: EFX).
MOST NOTEWORTHY: General Motors, Acuity Brands, Post Properties, Manpower and IMAX Corp were today's noteworthy upgrades:
UBS upgraded General Motors (NYSE: GM) to Buy from Sell citing a potential $3B in cost savings from the "transformational contract" with the UAW.
Acuity Brands (NYSE: AYI) was upgraded to Outperform from Neutral at Baird based on valuation and management's ability to execute.
Post Properties (NYSE: PPS) was raised to Neutral from Sell at Merrill Lynch following its Q3 report and guidance.
Citigroup upgraded shares of Manpower (NYSE: MAN) to Buy from Hold as they like the company's business model and balance sheet.
Soleil upgraded shares of IMAX Corporation (NASDAQ: IMAX) to Buy from hold with digital IMAX set to launch in Q208, to reflect the attractive economics of the company's new joint venture model.
OTHER UPGRADES:
Verizon Communications (NYSE: VZ) was upgraded to Market Perform from Underperform at Raymond James.
JMP Securities upgraded Actuate Corporation (NASDAQ: ACTU) to Outperform from Market Perform.
Citigroup upgraded FormFactor (FORM) to Buy from Hold and added shares to their Global Tech Conviction List.
MOST NOTEWORTHY: Lee Enterprises (LEE), The Pep Boys (PBY), Cumulus Media (CMLS), VeraSun Energy (VSE) and Acuity Brands (AYI) were today's more noteworthy upgrades:
Wachovia upgraded Lee Enterprises (NYSE: LEE) to Market Perform from Underperform on valuation.
RBC Capital raised Pep Boys (NYSE: PBY) to Sector Perform from Underperform citing upside potential from its real estate monetization strategy.
Cumulus Media (NASDAQ: CMLS) was upgraded to Hold from Sell at Citigroup based on the proposed buyout offer.
VeraSun Energy (NYSE: VSE) was upgraded to Hold from Sell at Soleil based on the acquisition of three 110mgy ethanol projects from ASAlliance.
Gabelli upgraded Acuity Brands (NYSE: AYI) to Hold from Sell following the company's announcement that it will pursue a tax-free spin-off of its specialty products business...
The lighting equipment company Acuity (NYSE: AYI) yesterday announced that it plans to spin-off its specialty products unit directly to shareholders later this year. According to the press report, Acuity is pursuing this spin-off to allow each company to operate separately, create company-specific compensation plans, and so on. The company stands to save $6 million just from a simpler corporate structure. I tend to believe that breaking up unrelated businesses makes sense because each business will be more efficiently valued if it stands as a separate entity.
If you haven't yet read my post about the opportunity in spin-off investments, check it out here. Spin-offs are undoubtedly one of the most interesting and lucrative investment fields in today's world due to "structural undervaluation." But the spin-off opportunity is becoming more and more obvious in recent times thanks to receiving front-page headlines in newspapers. All that being said, I think Acuity will probably trade up into the spin-off as investors try to position themselves to ride the spin-off trade.
On a slightly unrelated note, I saw You Can be a Stock Market Geniusin the bargain books section of Border's today -- that was the best $4 value investment I've ever seen.
MOST NOTEWORTHY: Sanofi-Aventis (SNY), Dell (DELL), Warner Music Group (WMG), KeyCorp (KEY) and SanDisk Corp (SNDK) were today's noteworthy upgrades:
HSBC upgraded shares of Sanofi-Aventis (NYSE: SNY) to Overweight from Neutral to reflect the company's new drug pipeline investments.
ThinkEquity raised Dell (NASDAQ: DELL) to buy from Sell based on expectations for a better-than-expected July quarter due to strong consumer business demand.
Pali Research upgraded Warner Music Group (NYSE: WMG) to Neutral from Sell on valuation with the stock down 40% year-to-date.
Merrill upgraded KeyCorp (NYSE: KEY) to Neutral from Sell following better-than-expected Q2 results.
JP Morgan upgraded SanDisk (NASDAQ: SNDK) to Overweight from Neutral citing increased demand for NAND applications and supply constraints...
OTHER UPGRADES:
Bernstein upgraded Campbell Soup (NYSE: CPB) to Outperform from Market Perform.
Boston Properties (NYSE: BXP) was raised to Hold from Underweight at Keefe Bruyette.
Matrix upgraded Acuity Brands (NYSE: AYI) to Strong Buy from Buy.
Bernstein raised Regions Financial (NYSE: RF) to Market Perform from Underperform.
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