Acuity Brands (AYI) to Post Tepid Q1 Earnings: Here's Why
Acuity Brands, Inc. AYI is slated to announce first-quarter fiscal 2024 results on Jan 9, before the opening bell.
In the last reported quarter, its adjusted earnings topped the Zacks Consensus Estimate by 11.2% and increased 0.5% year over year. However, the top line decreased 9% and missed the consensus mark by 0.7%.
Acuity Brands beat earnings expectations in the trailing 14 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained stable at $3.09 in the past 60 days. The estimated figure indicates a decrease of 6.1% from the $3.29 per share reported in the year-ago quarter.
Acuity Brands Inc Price and EPS Surprise
Acuity Brands Inc price-eps-surprise | Acuity Brands Inc Quote
The consensus mark for revenues is pegged at $924.47 million, suggesting a 7.4% decrease from the year-ago reported figure of $997.9 million.
Factors to Note
Acuity Brands’ revenues are expected to have declined year over year in the fiscal first quarter due to lower contribution from the Acuity Brands Lighting (“ABL”) segment. The segment is ailing from lead-time normalization trends and the impact of the wider macroeconomic environment.
Segment-wise, for the to-be-reported quarter, our model predicts total ABL segment revenues to decline 8.6% year over year to $865.6 million. The decline in the independent sales network and lower OEM sales will likely affect the segment’s revenues.
Within the ABL segment, we expect Independent Sales Network, Direct Sales Network, Retail Sales, Corporate Accounts and Other revenues to decline 7.9%, 9.2%, 8.7%, 4.8% and 16.9%, respectively, year over year.
However, the firm’s focus on enhancing product vitality, elevating service levels and benefiting from its technological enhancements and new product innovation is expected to partially offset the adverse effects of these headwinds.
The company has gained from its diversified portfolio of innovative lighting control solutions and energy-efficient luminaries. Its focus on Intelligent Spaces Group (“ISG”) products, which specialize in providing products and services that enhance the intelligence, safety and sustainability of spaces, bodes well. Our model predicts the ISG segment’s revenues in the fiscal first quarter to increase 16% year over year to $65.9 million.
Meanwhile, higher raw material and freight costs will likely put some pressure on AYI’s fiscal first-quarter margins. The company is going through supply chain challenges and higher costs for some components. Our model predicts the adjusted operating margin in the fiscal first quarter to decline by 60 basis points year over year to 13.4%.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for Acuity Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: Its earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently has a Zacks Rank #4 (Sell).
Stocks With the Favorable Combination
According to our model, here are some companies in the broader construction sector that have the right combination of elements to post an earnings beat in the quarter to be reported.
Martin Marietta Materials, Inc. MLM has an Earnings ESP of +8.53% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
MLM’s earnings topped the consensus mark in each of the last four quarters, the average being 37.3%. Earnings for the to-be-reported quarter are expected to fall 28.3% year over year.
Watsco, Inc. WSO has an Earnings ESP of +7.29% and a Zacks Rank #2.
WSO’s earnings topped the consensus mark in three of the trailing four quarters and missed on one occasion, the average surprise being 5.7%. Earnings for the to-be-reported quarter are expected to grow 8.9% year over year.
Dream Finders Homes Inc. DFH has an Earnings ESP of +7.46% and sports a Zacks Rank #1.
DFH’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average being 131.6%. Earnings for the to-be-reported quarter are expected to fall 14.1% year over year.
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