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Assessing Acuity Brands, Inc.'s (NYSE:AYI) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess AYI's latest performance announced on 31 May 2019 and evaluate these figures to its historical trend and industry movements.
How Well Did AYI Perform?
AYI's trailing twelve-month earnings (from 31 May 2019) of US$343m has increased by 3.2% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 14%, indicating the rate at which AYI is growing has slowed down. To understand what's happening, let's examine what's occurring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Acuity Brands has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 12% exceeds the US Electrical industry of 7.8%, indicating Acuity Brands has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Acuity Brands’s debt level, has declined over the past 3 years from 22% to 19%.
What does this mean?
Though Acuity Brands's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Acuity Brands to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AYI’s future growth? Take a look at our free research report of analyst consensus for AYI’s outlook.
- Financial Health: Are AYI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 May 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.