Acuity Brands, Inc. (AYI), a market-leading industrial technology company, recently reported impressive financial results for the fiscal first quarter of 2025. AYI, operating through two primary segments, Acuity Brands Lighting and Lighting Controls (ABL), and the Intelligent Spaces Group (ISG), provides lighting, lighting controls, building management systems, and location-aware applications.

The company offers a wide range of lighting solutions, targeting consumers like electrical distributors, retail home improvement centers, electric utilities, and corporate accounts. Its extensive range of products reflects its commitment to catering to specific requirements and end-user satisfaction.

Recently, Acuity Brands acquired QSC, LLC, resulting in the expansion of its Intelligent Spaces business and future opportunities. During the first quarter, AYI’s net sales from the Acuity Intelligent Spaces segment marked a strong growth of 14.5% from the year-ago value to $73.50 million, while its Acuity Brands Lighting sales were $886 million.

Acuity Brands keeps its operational vision and sustainability in sync with effective management and continuous efforts. The company endeavors to avoid greenhouse gas emissions through innovative products and services. Also, it has maintained sound cash flow. AYI’s net cash from operating activities was $132.2 million for the quarter.

Besides, as complexes across different sectors rise, seeking efficient and conscious technologies, AYI stands out as a key player in the segment with its innovative solution, sustainable and environmentally aligned products, and vast product range.

The performance of AYI’s shares is also consistent with its efforts and operations. AYI’s stock surged 28.8% over the past six months to close its last trading session at $321.97. Also, the stock has climbed over 43% over the past year.

Let’s look at factors that could influence AYI’s performance in the upcoming months.

Positive Recent Developments

On October 24, 2024, AYI entered a definitive agreement to acquire QSC, LLC, a leader in the evolving AV&C industry, for $1.22 billion. Through its Intelligent Spaces business, AYI caters to the end users powered by disruptive technologies. The strategic acquisition of QSC further strengthens the company’s vision of delivering smarter, safer, and greener spaces.

AYI integrates QSC’s advanced cloud-manageable audio, video, and control platform into its operations, resulting in innovation and sustainable growth.

Robust Financials

AYI’s net sales increased 1.8% year-over-year to $951.60 million during the first quarter that ended November 30, 2024. Its gross profit grew 4.9% from the year-ago value to $449.30 million. Also, the company’s adjusted operating profit rose 3.1% year-over-year to $158.70 million.

In addition, the company’s adjusted EBITDA of $171.60 million indicates growth of 2.9% from the prior year’s quarter. AYI’s adjusted net income and EPS came in at $126.30 million and $3.97, up 8.1% and 6.7% over the previous year, respectively.

Also, as of November 30, 2024, the company’s cash and cash equivalents stood at $935.60 million, compared to $845.80 million as of August 31, 2024.

Solid Historical Growth

AYI’s revenue and EBITDA have grown at respective CAGRs of 2.4% and 5.3% over the past three years. The company’s EBIT has increased at a CAGR of 7% over the same timeframe, while its net income and EPS have improved at CAGRs of 8.6% and 13.5%, respectively.

Furthermore, the company’s tangible book value and levered free cash flow have improved at respective CAGRs of 30.4% and 22.8% over the past three years.

Favorable Analyst Estimates

Analysts expect AYI’s revenue for the second quarter (ending February 2025) to increase 13.8% year-over-year to $1.03 billion. The consensus EPS estimate of $3.73 for the same quarter indicates a 10.5% year-over-year improvement. Moreover, AYI has an impressive earnings surprise history, having topped consensus EPS estimates in each of the trailing four quarters.

Further, looking forward to the fiscal year ending August 2025, the company’s revenue and EPS are expected to grow 14.4% and 11.9% year-over-year to $4.39 billion and $17.41, respectively. Also, Street expects revenue and EPS of AYI for the fiscal year 2026 to increase 9.8% and 11.9% year-over-year to $4.82 billion and $19.49, respectively.

High Profitability

AYI’s trailing-12-month gross profit margin of 46.72% is 47.4% higher than the industry average of 31.70%. Its trailing-12-month net income margin of 11.11% is 71.7% higher than the industry average of 6.47%. Also, the stock’s trailing-12-month EBIT margin of 14.44% is 39.8% higher than the industry average of 10.33%.

Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 18.94%, 12.25%, and 11.09% favorably compared to the industry averages of 13.46%, 7.18%, and 5.27%, respectively.

POWR Ratings Reflect Promise

AYI’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. AYI has an A grade for Quality, consistent with its higher-than-industry profitability.

In addition, the stock has a B grade for Sentiment, which is in sync with the impressive analysts’ anticipation.

AYI is ranked #2 in the 57-stock B-rated Home Improvement & Goods industry.

Beyond what I have stated above, we have also given AYI grades for Growth, Value, Momentum, and Stability. Get access to all the AYI ratings here.

Bottom Line

AYI is a creative, industrial technology company operating through numerous highly respected brands within the lighting and intelligent spaces. The company’s environment-conscious strategies, along with strategic acquisition, strong market position, and solid financial health, position it for bright long-term prospects.

The Board declared a quarterly dividend of $0.15 per share and repurchased approximately 17,000 shares of common stock for a total of approximately $5 million, supported by continued strong cash generation.

Given its reliable profitability, solid cash flow, and solid financial performance, AYI is poised to continue its upward trajectory in 2025 and beyond. Thus, now could be an opportune moment to consider adding this stock to one’s holdings.

How Does Acuity Brands, Inc. (AYI) Stack Up Against Its Peers?

While AYI has an overall POWR Rating of A, investors could also check out these other stocks within the B-rated Home Improvement & Goods industry with A (Strong Buy) or B (Buy) ratings: Steelcase Inc. (SCS), HNI Corporation (HNI), and Kingfisher PLC ADR (KGFHY).

For exploring more A and B-rated home improvement stocks, click here.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

AYI shares were trading at $324.02 per share on Wednesday morning, up $2.05 (+0.64%). Year-to-date, AYI has gained 10.92%, versus a 0.68% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

More Resources for the Stocks in this Article