Acuity Brands, Inc. (AYI) | Investment Case

1. Company Snapshot

1.a. Company Description

Acuity Brands, Inc.provides lighting and building management solutions in North America and internationally.The company operates through two segments, Acuity Brands Lighting and Lighting Controls (ABL); and the Intelligent Spaces Group (ISG).

The ABL segment provides commercial, architectural, and specialty lighting solutions, as well as lighting controls and components for various indoor and outdoor applications under the Lithonia Lighting, Holophane, Peerless, Gotham, Mark Architectural Lighting, Winona Lighting, Juno, Indy, Aculux, Healthcare Lighting, Hydrel, American Electric Lighting, Sunoptics, eldoLED, nLight, Sensor Switch, IOTA, A-Light, Cyclone, Eureka, Lumniaire LED, Luminis, Dark to Light, and RELOC Wiring Solutions brands.This segment serves electrical distributors, retail home improvement centers, electric utilities, national accounts, digital retailers, lighting showrooms, and energy service companies.The ISG segment offers building management systems and location-aware applications under the Distech Controls, Atrius, and Rockpile Ventures brands.

This segment serves system integrators, as well as retail stores, airports, and enterprise campuses.Acuity Brands, Inc.was incorporated in 2001 and is headquartered in Atlanta, Georgia.

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1.b. Last Insights on AYI

Acuity Brands' recent performance was driven by strong Q4 results, with revenue up 17.1% and adjusted EPS beating expectations, fueled by the QSC acquisition. The company's net sales growth and improved operating performance were notable, with fiscal Q4 2025 net sales at $1.2B. Management projects further growth in 2026, with revenue guidance of $4.7–$4.9 billion. A quarterly dividend of 17 cents per share was also declared. The company's operational strength and positive outlook are notable, with $601M in cash flow from operations generated in fiscal 2025.

1.c. Company Highlights

Last Price	371.27
Change Percentage	-0.26%
Open	369.79
Previous Close	372.25
Market Cap ( Millions)	11366
Volume	80482
Year High	379.17
Year Low	216.81
M A 50	359.29
M A 200	304.61

FCF Yield	4.69%
Dividend Yield	0.18%
ROE	15.41%
Debt / Equity	32.91%
Net Debt / EBIDTA	74.30%
Price To Book	4.18
Price Earnings Ratio	28.73
Price To FCF	21.32
Price To sales	2.62
EV / EBITDA	18.55

2. Acuity Brands' Strong Q4 FY2025 Earnings: Growth and Margin Expansion

Acuity Brands delivered a robust fiscal 2025 fourth quarter performance, with net sales reaching $1.2 billion, a 17% increase from the prior year. Adjusted operating profit was $225 million, up 26% from last year, resulting in an adjusted operating profit margin of 18.6%. Adjusted diluted earnings per share (EPS) came in at $5.20, surpassing analyst estimates of $4.7, representing a 21% increase over the prior year.

Publication Date: Oct -27

                                    📋 Highlights
                                    Q4 Net Sales Growth::
                                                Acuity Brands reported $1.2 billion in fiscal 2025 Q4 net sales, reflecting a 17% increase year-over-year driven by both business segments.
Adjusted Operating Profit Expansion::
                                                Adjusted operating profit surged to $225 million (+26% YoY) with a margin of 18.6%, up from previous periods.
ABL Segment Performance::
                                                Acuity Brands Lighting (ABL) achieved $962 million in sales (+1% YoY) and a 20.1% adjusted operating margin, up 210 basis points.
AIS Segment Growth::
                                                Acuity Intelligent Spaces (AIS) sales rose to $255 million (+$171 million YoY), with an adjusted operating margin of 21.4%.
Capital Allocation & Cash Flow::
                                                Generated $601 million in cash flow from operations, allocating over $1.2 billion to acquisitions and repaying $200 million in debt.

                                

Segmental Performance

Acuity Brands Lighting (ABL) sales were $962 million, up 1% versus the prior year, driven by growth in the independent sales network. Adjusted operating profit increased to $194 million, with an adjusted operating profit margin of 20.1%, up 210 basis points compared to the prior year. Acuity Intelligent Spaces (AIS) sales were $255 million, with QSC growing approximately 15% year-over-year, and adjusted operating profit margin of 21.4%.

Cash Flow and Capital Allocation

The company generated $601 million of cash flow from operations and allocated capital effectively, investing $68 million in capital expenditures, over $1.2 billion in acquisitions, and repaying $200 million of its term loan.

Outlook and Guidance

For full-year fiscal 2026, Acuity Brands expects net sales to be within the range of $4.7 billion and $4.9 billion, with adjusted diluted EPS within the range of $19 to $20.50. The company expects low single-digit ABL growth, with price increases to offset tariffs, and AIS to focus on growth and margin expansion.

Valuation and Metrics

With a P/E Ratio of 28.5 and EV/EBITDA of 18.42, Acuity Brands' valuation suggests that the market has priced in a certain level of growth. The company's ROIC of 11.44% and ROE of 15.41% indicate a strong return on capital. Analysts estimate next year's revenue growth at 9.3%, which may be achievable given the company's historical performance and guidance.

3. NewsRoom

Acuity Insights Named One of Greater Toronto's Top Employers For the Second Year in a Row

Dec -02

Source: globenewswire.com

Acuity Knowledge Partners rebrands to Acuity Analytics and launches new website

Dec -02

Source: globenewswire.com

Acuity to Announce Fiscal 2026 First-Quarter Results on January 8, 2026

Dec -01

Source: globenewswire.com

Acuity Shines As It Transforms Itself. IBD's Stock Of The Day Nears Buy Point.

Dec -01

Source: investors.com

Creative Planning Raises Stock Position in Acuity, Inc. $AYI

Nov -29

Source: defenseworld.net

Acuity (AYI) Upgraded to Buy: Here's What You Should Know

Nov -28

Source: zacks.com

Boston Partners Grows Stake in Acuity, Inc. $AYI

Nov -27

Source: defenseworld.net

AXQ Capital LP Sells 411 Shares of Acuity, Inc. $AYI

Nov -25

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.44%)

6. Segments

Acuity Brands Lighting and Lighting Controls

Expected Growth: 2.5%

Acuity Brands Lighting and Lighting Controls' 2.5% growth is driven by increasing demand for energy-efficient LED lighting, growing adoption of smart lighting controls, and rising construction activities in commercial and industrial buildings, as well as the company's strategic acquisitions and product innovations.

Intelligent Spaces Group

Expected Growth: 1.8%

Intelligent Spaces Group's 1.8% growth is driven by increasing demand for smart building solutions, IoT-enabled lighting, and energy-efficient systems. Additionally, the group's focus on digital transformation, strategic acquisitions, and expansion into new markets contribute to its growth momentum.

Eliminations

Expected Growth: 0.5%

Acuity Brands, Inc.'s 0.5% growth in Eliminations is driven by modest increases in intercompany sales and services, offset by declines in intercompany royalties and fees. This growth is also influenced by the company's strategic efforts to optimize its supply chain and logistics, resulting in reduced intercompany transactions.

7. Detailed Products

Luminaire

Lighting fixtures for commercial, industrial, and residential applications

Lighting Controls

Smart lighting control systems for energy efficiency and automation

Building Management Systems (BMS)

Integrated systems for controlling and monitoring building systems

Occupancy Sensors

Motion sensors for energy-efficient lighting and HVAC control

Daylighting Solutions

Natural lighting systems for energy efficiency and occupant comfort

Emergency Lighting

Emergency lighting systems for safety and code compliance

Exit Signs

Self-luminous and electric exit signs for safety and code compliance

Networked Lighting Controls

Wireless lighting control systems for energy efficiency and automation

LED Lighting

Energy-efficient LED lighting solutions for various applications

8. Acuity Brands, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Acuity Brands, Inc. is medium due to the availability of alternative lighting solutions from competitors.

Bargaining Power Of Customers

The bargaining power of customers for Acuity Brands, Inc. is low due to the company's strong brand reputation and diversified customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Acuity Brands, Inc. is medium due to the company's dependence on a few key suppliers for raw materials.

Threat Of New Entrants

The threat of new entrants for Acuity Brands, Inc. is high due to the relatively low barriers to entry in the lighting industry.

Intensity Of Rivalry

The intensity of rivalry for Acuity Brands, Inc. is high due to the competitive nature of the lighting industry and the presence of several established players.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	20.36%
Debt Cost	4.92%
Equity Weight	79.64%
Equity Cost	11.31%
WACC	10.01%
Leverage	25.57%

11. Quality Control: Acuity Brands, Inc. passed 8 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

EnerSys

A-Score: 5.2/10

Value: 4.4

Growth: 6.2

Quality: 5.7

Yield: 2.0

Momentum: 6.5

Volatility: 6.3

1-Year Total Return ->

Acuity Brands

A-Score: 5.2/10

Value: 2.8

Growth: 6.8

Quality: 7.0

Yield: 0.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

Hubbell

A-Score: 5.1/10

Value: 2.0

Growth: 6.8

Quality: 7.2

Yield: 3.0

Momentum: 4.0

Volatility: 7.7

1-Year Total Return ->

Atkore

A-Score: 4.6/10

Value: 6.1

Growth: 8.0

Quality: 4.8

Yield: 2.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

Hayward Holdings

A-Score: 4.3/10

Value: 3.6

Growth: 3.2

Quality: 7.4

Yield: 0.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

Advanced Energy Industries

A-Score: 4.1/10

Value: 0.6

Growth: 4.9

Quality: 5.3

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

9.34%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.01%

Acuity Brands, Inc. - US00508Y1029

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AYI

1.c. Company Highlights

Better Quality

Strong Momentum

Average Growth

Earnings Beats

Medium Volatility

Revenues Miss

Average Yield

Stable Momentum

Revenues Beats

Average Quality

Fairly Valued

Less Volatile

2. Acuity Brands' Strong Q4 FY2025 Earnings: Growth and Margin Expansion

Segmental Performance

Cash Flow and Capital Allocation

Outlook and Guidance

Valuation and Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.44%)

6. Segments

Acuity Brands Lighting and Lighting Controls

Expected Growth: 2.5%

Intelligent Spaces Group

Expected Growth: 1.8%

Eliminations

Expected Growth: 0.5%

7. Detailed Products

Luminaire

Lighting Controls

Building Management Systems (BMS)

Occupancy Sensors

Daylighting Solutions

Emergency Lighting

Exit Signs

Networked Lighting Controls

LED Lighting

8. Acuity Brands, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Acuity Brands, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

371.27$

Current Price

371.27$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA