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Acuity Brands, Inc. (NYSE:AYI) Just Reported And Analysts Have Been Lifting Their Price Targets

Acuity Brands, Inc. (NYSE:AYI) just released its annual report and things are looking bullish. Results were good overall, with revenues beating analyst predictions by 2.0% to hit US$3.3b. Statutory earnings per share (EPS) came in at US$6.27, some 3.3% above whatthe analysts had expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Acuity Brands

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earnings-and-revenue-growth

Following last week's earnings report, Acuity Brands' nine analysts are forecasting 2021 revenues to be US$3.27b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 3.2% to US$6.48. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.34b and earnings per share (EPS) of US$6.79 in 2021. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The average price target climbed 7.2% to US$111despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Acuity Brands analyst has a price target of US$125 per share, while the most pessimistic values it at US$89.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Acuity Brands shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Acuity Brands' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 1.6% revenue decline a notable change from historical growth of 4.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.4% next year. It's pretty clear that Acuity Brands' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Acuity Brands. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Acuity Brands going out to 2023, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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