Lighting solutions leader Acuity Brands (AYI) will report results from its third quarter tomorrow morning; management will host a call at 10:00 a.m.
Third quarter adjusted EPS is expected to grow 6% with revenue up 3%.
Last quarter, Acuity missed on the top line, but revenue still grew 3% to a record for the seasonally slow second quarter. The company instituted price increases in the first quarter to combat higher input costs and tariffs on Chinese supplies. Management warned that demand had been pulled forward in the first quarter ahead of the price increases. As a result, the modest (< 3%) miss on the top line was not a huge concern while investors were encouraged that adjusted operating margins returned to yr/yr expansion for the first time in six quarters.
Acuity expects to continue outperforming the low-single-digit growth expected in the North American lighting market. Price increases will provide a tailwind on the top line for the rest of the year. Management warned that the retail channel/mix could continue to pressure the top and bottom line, offset by lower freight costs, but the channel also diversifies the business and leverages its brand and supply chain.
Acuity is expected to grow EPS 9% with revenue up 4% for fiscal 2019.
With a market value of ~$5.6 bln, the stock trades at ~14x EPS and ~9x EV/EBITDA, which is roughly on par with the average residential building products supplier.
The stock just broke out above its 50-day moving average after trading in a narrow channel for much of June. The stock is down some 50% since peaking three years ago.