For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Acuity Brands, Inc.’s (NYSE:AYI) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Was AYI’s recent earnings decline worse than the long-term trend and the industry?
AYI’s trailing twelve-month earnings (from 29 February 2020) of US$299m has declined by -8.7% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 8.3%, indicating the rate at which AYI is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Acuity Brands has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 9.7% exceeds the US Electrical industry of 6.0%, indicating Acuity Brands has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Acuity Brands’s debt level, has declined over the past 3 years from 21% to 15%.
What does this mean?
Acuity Brands’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I suggest you continue to research Acuity Brands to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AYI’s future growth? Take a look at our free research report of analyst consensus for AYI’s outlook.
- Financial Health: Are AYI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 29 February 2020. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.