Acuity Inc. (NYSE:AYI) will release earnings results for its first quarter before the opening bell on Thursday, Jan. 8, 2025.Analysts expect the Atlanta, Georgia-based company to report quarterly earnings at $4.59 per share, up from $3.97 per share in the year-ago period. The consensus estimate for Acuity's quarterly revenue is $1.14 billion, up from $951.6 million a year earlier, according to data from Benzinga Pro.On Oct. 1, the company reported fourth-quarter net sales growth of 17.1% year-over-year to $ ...

Geopolitical Developments - The U.S. launched a military strike on Venezuela, extracting President Nicolás Maduro to face criminal charges in the U.S. [2] - President Trump stated that the U.S. would "run" Venezuela until an orderly transition is possible and that U.S. oil companies would rebuild Venezuela's oil infrastructure [2][3] Market Reactions - Investors are expected to closely monitor developments in Venezuela and seek more details from the Trump administration, particularly regarding the oil market, which may experience volatility [3] Employment and Economic Data - The Bureau of Labor Statistics is set to release the December jobs report, which could influence interest rates [6] - Federal Reserve officials indicated that a weakening labor market might lead to more interest rate cuts, with upcoming reports on job openings, private sector hiring, and jobless claims providing insights into the labor market [7] Corporate Earnings Reports - Applied Digital, a data center operator, will report on the AI industry, with investors looking for signals of strong AI spending [9] - Constellation Brands, Tilray Brands, Albertsons Companies, CalMaine Foods, and Simply Good Foods are among the companies reporting earnings this week, providing insights into consumer spending levels [10][11]

Core Viewpoint - Acuity (AYI) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based solely on changes in a company's earnings picture, with the Zacks Consensus Estimate reflecting EPS estimates from sell-side analysts [1][2]. - A positive change in earnings estimates is strongly correlated with near-term stock price movements, influenced by institutional investors who adjust their valuations based on these estimates [4][6]. Company Performance and Investor Sentiment - The upgrade for Acuity suggests an improvement in the company's underlying business, which should encourage investors to drive the stock price higher [5]. - Over the past three months, the Zacks Consensus Estimate for Acuity has increased by 3%, with expected earnings of $19.76 per share for the fiscal year ending August 2026, unchanged from the previous year [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Acuity's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Viewpoint - Acuity Inc. is set to release its fiscal 2026 first-quarter results on January 8, 2026, with a conference call led by CEO Neil Ashe [1]. Company Overview - Acuity Inc. (NYSE: AYI) is a leading industrial technology company focused on solving problems related to spaces and lighting through innovative products and services [3]. - The company operates through two main segments: Acuity Brands Lighting (ABL) and Acuity Intelligent Spaces (AIS) [3]. Growth Strategy - Acuity aims to achieve growth by developing innovative products and services, including lighting, lighting controls, building management solutions, and an audio, video, and control platform [4]. - The company emphasizes customer outcomes to drive growth and productivity, aiming to increase market share and deliver superior returns [4]. - Acuity plans to aggressively deploy capital to expand its business and enter attractive new verticals [4]. Operational Footprint - Acuity Inc. is headquartered in Atlanta, Georgia, and has operations across North America, Europe, and Asia, supported by approximately 13,000 associates [5].

Core Insights - Futures are rising, indicating a positive market sentiment, with notable gains in stocks like Marvell and American Eagle [1] - Acuity Brands is highlighted for its strong technical performance, achieving a Composite Rating of 95 out of 99 and showing support at converged 21-day and 50-day lines [1] - The stock market is experiencing a rebound, with Nasdaq leading the way and key stocks such as Snowflake and Acuity Brands being closely monitored [1][2] Company Performance - Acuity Brands has cleared a technical benchmark, achieving an 80-plus Relative Strength (RS) Rating, indicating strong market performance [4] - The stock is approaching a key technical benchmark, with a flat base pattern emerging, which is considered a positive sign in technical analysis [1][4] - Acuity Brands is part of a group of stocks showing improving market leadership, earning an RS Rating of 82 [4] Market Trends - Small-cap stocks are experiencing significant gains, with Acuity Brands and others like ESLT and BX in focus as they race higher after a breakout [4] - The overall market is showing signs of recovery, with the Nasdaq leading the rebound and various stocks, including Acuity Brands, being highlighted for their performance [1][2]

Core Viewpoint - Acuity (AYI) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [2][3]. - Institutional investors rely on earnings estimates to determine the fair value of stocks, leading to significant price movements based on their buying or selling actions [3]. Business Improvement Indicators - The upgrade in Acuity's rating suggests an improvement in the company's underlying business, which is expected to drive the stock price higher as investors recognize this trend [4]. Importance of Earnings Estimate Revisions - Research indicates a strong correlation between earnings estimate revisions and stock movements, making it beneficial for investors to track these revisions [5]. - The Zacks Rank system utilizes four factors related to earnings estimates to classify stocks, with a proven track record of generating substantial returns for top-rated stocks [6]. Current Earnings Estimates for Acuity - Acuity is projected to earn $19.75 per share for the fiscal year ending August 2026, with no year-over-year change, but analysts have raised their estimates by 4% over the past three months [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of ratings, ensuring that only the top 20% of stocks receive a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [8][9]. - Acuity's upgrade to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [9].

Core Insights - Investors in the Technology Services sector may consider Acuity (AYI) and SPX Technologies (SPXC) as potential value stocks [1] - Both companies currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3] Valuation Metrics - AYI has a forward P/E ratio of 18.29, while SPXC has a forward P/E of 31.72, suggesting AYI may be more undervalued [5] - AYI's PEG ratio is 1.83, compared to SPXC's PEG ratio of 2.01, indicating AYI's expected earnings growth is more favorable relative to its valuation [5] - AYI's P/B ratio is 4.06, while SPXC's P/B ratio is 4.95, further supporting AYI's position as the superior value option [6] Value Grades - AYI has a Value grade of B, while SPXC has a Value grade of D, highlighting AYI's stronger valuation metrics [6]

Core Insights - Acuity Brands reported mixed Q4 fiscal 2025 results, with earnings exceeding estimates while revenues fell short, although both metrics improved year-over-year [2][4]. Financial Performance - Adjusted EPS was $5.20, surpassing the Zacks Consensus Estimate of $4.70 by 10.6%, and increased 21% from $4.30 in the prior year [4]. - Net sales reached $1.209 billion, missing the consensus mark of $1.212 billion by 0.3%, but showing a 17.1% increase from the previous year [4]. Segment Performance - The Acuity Brands Lighting segment saw a 0.8% increase in quarterly sales to $962.4 million, while the Independent Sales Network sales rose 3.7% to $702.4 million [5]. - Acuity Intelligent Spaces generated net sales of $255.2 million, a significant increase of 204.2% year-over-year, with adjusted operating profit rising 154% to $54.6 million [7]. Operating Highlights - Adjusted operating profit increased 26.2% year-over-year to $225.3 million, with an adjusted operating margin of 18.6%, up 130 basis points [8]. - Adjusted EBITDA rose 25.8% to $240.7 million, with an adjusted EBITDA margin expanding 140 basis points to 19.9% [8]. Financial Position - As of the end of Q4, cash and cash equivalents were $422.5 million, down from $845.8 million at the end of fiscal 2024, while long-term debt increased to $896.8 million from $496.2 million [10]. - For fiscal 2025, cash provided by operating activities totaled $601.4 million, down from $619.2 million in the prior year [10]. Shareholder Returns - The company repurchased nearly 0.44 million shares for $118.5 million and repaid $200 million of term-loan borrowings, while also increasing its quarterly dividend by 13% to 17 cents per share [11]. Future Guidance - For fiscal 2026, Acuity expects net sales between $4.7 billion and $4.9 billion, indicating growth from $3.84 billion in fiscal 2024, with adjusted EPS projected in the range of $19-$20.50 [12].

Competitive Risks - The company faces risks from aggressive pricing actions by competitors, which may affect revenue growth and profitability levels[33]. - The company competes in a rapidly evolving technological landscape, where new competitors may offer integrated solutions that challenge existing offerings[43]. - Relationships with channel partners are crucial, and the loss of significant partners could harm business operations[44]. Product and Innovation Risks - New product innovations may not yield desired returns, potentially leading to inventory write-downs and impacting overall business performance[34]. - The company has begun incorporating AI capabilities into its product offerings, which may pose risks related to accuracy, bias, and legal liability[69]. - Product recalls due to design or manufacturing issues could result in substantial costs, including lost sales and penalties[77][78]. Supply Chain and Operational Risks - Supply chain disruptions, particularly for components like microchips, have resulted in increased costs and may affect timely procurement of materials[39]. - The company relies on third-party relationships for various operations, which introduces risks related to product quality and operational interruptions[59]. - The company operates seven manufacturing facilities in Mexico, some of which hold Maquiladora status, allowing duty-free import of raw materials[62]. Geopolitical and Economic Risks - The company is exposed to geopolitical risks, with approximately 55% of finished products manufactured in Mexico, which could disrupt supply chains[45]. - Economic conditions, including potential recessions and rising commodity costs, may adversely affect cash flows and access to capital[38]. - The company is subject to various international regulations, including the USMCA, which affects a significant portion of its sales[63]. Labor and Workforce Risks - The company employed approximately 13,800 people as of August 31, 2025, with about 9,300 in international locations[56]. - Approximately 58% of the workforce is covered by union recognition and collective bargaining agreements, with 48% of these agreements set to expire within one year[56]. - The company faces intense competition for qualified personnel, which may impact its ability to attract and retain key employees amid rising labor costs and shortages[57]. Financial and Currency Risks - The company is exposed to foreign currency fluctuations, which could impact pricing competitiveness and overall financial performance[66]. - A hypothetical 10% depreciation of the Canadian dollar could negatively impact operating profit by approximately $3.0 million, while a 10% appreciation could favorably impact it by approximately $3.7 million[186]. - A 10% decrease in the value of the Mexican peso could favorably impact operating profit by approximately $23.0 million, whereas a 10% increase could negatively impact it by approximately $28.1 million[186]. - The company has a significant exposure to variable-rate debt, with $400.0 million borrowings outstanding on its credit facility[185]. Regulatory and Compliance Risks - The company is subject to a range of environmental regulations, including those related to greenhouse gas emissions, which may increase operational costs[71]. - The company may face challenges in complying with evolving ESG standards, which could affect its reputation and financial performance[74]. - The company is subject to evolving laws and regulations regarding ESG disclosures, which may increase operational costs and impact future financial conditions[75][84]. Legal and Reputational Risks - Legal claims arising from normal business operations may exceed insurance coverage, potentially leading to significant financial liabilities[76]. - The company may incur significant costs and reputational damage from security breaches affecting personal and proprietary information[52]. - The company may face reputational damage and adverse financial impacts if it fails to meet evolving stakeholder ESG expectations[84]. - Cybersecurity risks are increasing, with potential impacts on operations and financial reporting due to sophisticated cyber threats[49]. Climate and Sustainability Risks - The company faces risks related to climate change and sustainability, which may lead to increased operational costs and regulatory compliance burdens[81][82].

Core Insights - Acuity (AYI) is currently viewed as a more attractive investment option compared to Duolingo, Inc. (DUOL) for value investors seeking undervalued stocks [1] Valuation Metrics - AYI has a forward P/E ratio of 18.52, significantly lower than DUOL's forward P/E of 107.94, indicating that AYI is more reasonably priced relative to its earnings [5] - AYI's PEG ratio stands at 1.85, while DUOL's PEG ratio is higher at 2.25, suggesting AYI offers better value when considering expected earnings growth [5] - AYI's P/B ratio is 4.12, compared to DUOL's P/B of 15.98, further highlighting AYI's relative undervaluation [6] Earnings Outlook - AYI is experiencing an improving earnings outlook, which contributes to its strong Zacks Rank of 1 (Strong Buy), while DUOL holds a Zacks Rank of 2 (Buy) [3][7]