How Acuity Earnings Could Keep Getting Brighter

Acuity Brands (NYSE: AYI  ) will release its quarterly report on Tuesday, and the producer of lighting products for residential, industrial, and commercial use has seen its stock soar to all-time record highs recently. Yet investors want to see whether Acuity earnings can produce the growth that they've come to expect, especially as improving conditions in the housing market should arguably help give the company some financial tailwinds to boost its overall results.

Acuity Brands has a wide-ranging business that includes many different aspects of the lighting industry. Its systems and controls serve commercial and municipal customers with products to help keep businesses and communities safe. Moreover, the company also produces daylighting systems to maximize the use of natural light within homes and office buildings. Still, the big area of interest for lighting has been in light-emitting diodes, and Acuity has a presence there as well. Let's take an early look at what's been happening with Acuity Brands over the past quarter and what we're likely to see in its report.

Stats on Acuity Brands

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$569.52 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Acuity earnings light up investors' lives this quarter?
Analysts have had mixed views on the prospects for Acuity earnings in recent months. They've cut $0.02 per share from their August-quarter estimates, but they've added the same amount to their projections for the November quarter. All told, though, the stock has climbed nicely, posting a 23% jump since late June.

A big part of Acuity's gains came in the wake of its May-quarter earnings report. The company reported an 11% increase in net sales, producing 20% growth in adjusted earnings. CEO Vernon Nagel highlighted the company's growth in LED lighting solutions, where sales more than doubled from year-ago levels and now make up about a fifth of the company's total revenue. Acuity overcame sluggish prices by boosting volume, taking advantage of better conditions in the residential market and growth in retrofits and renovations in its commercial and industrial areas as well.

Of course, Acuity is far from the only company seeking to benefit from the growing LED market. Rival Cree (NASDAQ: CREE  ) has worked vigorously to expand the number of applications it offers with its lighting systems, ranging from parking-garage installations and streetlights to consumer lighting and commercial office settings. General Electric has also sought to stay relevant in its original business by offering LED modules as part of broader-based lighting solutions for commercial and retail customers.

But the benefit of investing in Acuity comes in part from its lack of reliance on LEDs. Cree's shares sank after its most recent quarterly report in August, as the company wasn't able to grow its business fast enough to make investors happy. Moreover, Cree gave uninspiring guidance for the coming quarter, throwing cold water on high-growth hopes among shareholders. Yet unlike General Electric, Acuity remains focused enough on the lighting business to give pure-play exposure to the industry.

In the Acuity earnings report, watch for discussion of how the company's relationship with organic-LED producer Universal Display is faring. With Universal having subcontracted some of its government work to Acuity, Acuity could benefit if the OLED market is able to grow as a competitor to traditional LED lighting.

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9/27/2016 3:03 PM
AYI $262.33 Up +4.02 +1.56%
Acuity Brands CAPS Rating: ***
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GE $29.89 Up +0.35 +1.18%
General Electric CAPS Rating: ****
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Universal Display CAPS Rating: ****