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Acuity Brands Drops 5.5% Despite 1Q Profit Beat; Oppenheimer Stays Bullish

Shares of Acuity Manufacturers fell 5.5% on Thursday at the same time as the economic know-how firm posted better-than-anticipated outcomes for the primary quarter of fiscal 2021 (ended Nov. 30)

Acuity Manufacturers’ (AYI) adjusted EPS within the first quarter declined 4.7% year-over-year to $2.03 however surpassed analysts’ estimates of $1.86. Earnings have been dragged down by decrease gross sales and a decline in adjusted margins.

In the meantime, first-quarter gross sales fell 5.1% year-over-year to $792 million however topped analysts’ expectations of $790.3 million. The corporate’s prime line was impacted by decrease income from direct gross sales and company accounts channels. That stated, gross sales within the retail channel benefited from greater demand for residential merchandise. (See AYI stock analysis on TipRanks)

The corporate cited decrease volumes, declining costs on sure merchandise and an unfavorable combine as the explanations for the decreased gross sales from the unbiased gross sales community. In the meantime, gross sales within the direct gross sales community have been adversely impacted by weak spot in massive industrial initiatives, which the corporate famous have been impacted by the COVID-19 pandemic. The company accounts gross sales have been hit by decrease renovation exercise with massive, big-box retailers amid the present well being disaster.

CEO Neil Ashe commented, “We proceed to spend money on our enterprise to increase our know-how and product portfolios in lighting, lighting controls, and clever buildings whereas we drive our transformation to enhance our service capabilities.”

“Whereas the restoration within the financial setting stays unsure because of the impacts of the pandemic, we’re cautiously optimistic about returning to stability in our finish markets in calendar yr 2021, and are excited in regards to the alternative that lies earlier than us to rework our enterprise and acquire share,” Ashe added.

Following the discharge of the monetary outcomes, Oppenheimer analyst Christopher Glynn reiterated a Purchase ranking on the inventory with a worth goal of $135. The analyst famous that administration’s commentary displays cautious optimism for finish market stability returning in 2021 amidst macro uncertainties, continued market share execution and enterprise mannequin transformations in addition to continued use of free money stream for progress investments and share buybacks.

“AYI’s pristine stability sheet and focused share repurchase enhances continued regular execution amidst a interval of softer finish markets, underscoring strategic and aggressive strengths in our view,” Glynn concluded.

Total, Acuity Manufacturers scores the Avenue’s Reasonable Purchase analyst consensus primarily based on 2 Buys and 1 Maintain. The typical price target stands at $140, reflecting 15.5% upside potential over the approaching yr. Shares have declined 13.6% over the previous yr.

Acuity

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