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Acuity Brands' (AYI) Q3 Earnings, Sales Beat Estimates

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Shoe Carnival (SCVL) Surpasses Q3 Earnings and Revenue Estimates

Shoe Carnival (SCVL) delivered earnings and revenue surprises of 24.59% and 1.43%, respectively, for the quarter ended October 2018. Do the numbers hold clues to what lies ahead for the stock?

Acuity Brands, Inc. AYI reported third-quarter fiscal 2018 adjusted earnings of $2.37 per share, beating the Zacks Consensus Estimate of $2.17 by 9.2%. Also, earnings increased 10.2% on a year-over-year basis. The upside can be attributed to increase in net sales driven by greater shipments of Atrius-based luminaires along with products for infrastructure and utility projects.

Sales

Net sales during the quarter were $944 million, beating the Zacks Consensus Estimate of $906.7 million by 4.1%. The reported figure also rose 5.9% year over year.

The upside came on the back of a more than 10% increase in sales volume as well as 1% favorable impact from changes in acquisitions and foreign exchange rates. These were partially offset by a 5% unfavorable change in product prices and mix of products sold (price/mix).

LED-based product sales represented over two-thirds of fiscal third-quarter net sales.

Operating Highlights

Adjusted gross profit margin was 41.6% in the quarter under review, down 90 basis points (bps) on a year-over-year basis. Adjusted operating margin was 14.4%, down 220 bps year over year.

Adjusted selling, distribution and administrative or SG&A expenses were 27.2% of quarterly net sales compared with 25.9% in the year-ago quarter.

Acuity Brands Inc Price, Consensus and EPS Surprise

Acuity Brands Inc Price, Consensus and EPS Surprise | Acuity Brands Inc Quote

Financials

Cash and cash equivalents, as of May 31, 2018, were $94.3 million, down from $311.1 million in fiscal 2017.

Net cash provided by operating activities was $300.7 million in the first nine months of fiscal 2018, compared with $198 million a year ago.

Outlook

Acuity Brands expects primary market to improve modestly in the second half of 2018 following several quarters of weak demand.

Pricing environment is expected to be challenging in portions of the market, particularly for more basic, lesser-featured products sold through certain sales channels as well as shifts in product mix. These are expected to persistently affect net sales and margins.

Zacks Rank

Acuity Brands currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Zacks Construction sector are Beazer Homes USA, Inc. BZH, Lennar Corp. LEN and Meritage Corp. MTH.

All three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Beazer Homes is expected to witness 78.3% growth in earnings this quarter.

Lennar is expected to see earnings growth of 37.5% this year.

Meritage is expected to witness 42.5% increase in 2018 earnings.

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