Electrical Systems Stocks Q3 Teardown: Acuity Brands (NYSE:AYI) Vs The Rest
The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Acuity Brands (NYSE:AYI) and the rest of the electrical systems stocks fared in Q3.
Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.
The 16 electrical systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 0.5% below.
Thankfully, share prices of the companies have been resilient as they are up 7.2% on average since the latest earnings results.
Acuity Brands (NYSE:AYI)
One of the pioneers of smart lights, Acuity (NYSE:AYI) designs and manufactures light fixtures and building management systems used in various industries.
Acuity Brands reported revenues of $1.03 billion, up 2.2% year on year. This print exceeded analysts’ expectations by 0.8%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates.
“Our fiscal 2024 fourth quarter performance was strong. We grew net sales in both Lighting and Spaces, delivered margin expansion and increased earnings per share," stated Neil Ashe, Chairman, President and Chief Executive Officer of Acuity Brands,
Acuity Brands Total Revenue
Interestingly, the stock is up 17.5% since reporting and currently trades at $323.50.
Founded in 1946, Methode Electronics (NYSE:MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).
Methode Electronics reported revenues of $292.6 million, up 1.6% year on year, outperforming analysts’ expectations by 9%. The business had an incredible quarter with a solid beat of analysts’ EPS and EBITDA estimates.
Methode Electronics Total Revenue
Methode Electronics pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 9.6% since reporting. It currently trades at $12.74.
Napco Security Technologies, Inc. (NASDAQ:NSSC) is a leading manufacturer and designer of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems, and school safety solutions.
Napco reported revenues of $44 million, up 5.6% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Napco delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 1.3% since the results and currently trades at $39.10.
Protecting the things that power our world, Atkore (NYSE:ATKR) designs and manufactures electrical safety products.
Atkore reported revenues of $788.3 million, down 9.4% year on year. This print beat analysts’ expectations by 5.3%. Aside from that, it was a mixed quarter as it also produced an impressive beat of analysts’ organic revenue estimates but full-year EPS guidance missing analysts’ expectations significantly.
The stock is up 6.9% since reporting and currently trades at $89.93.
Managing over 165 million tolling transactions per year, Verra Mobility (NYSE:VRRM) is a leading provider of smart mobility technology that enhances safety, efficiency, and convenience on roadways.
Verra Mobility reported revenues of $225.6 million, up 7.4% year on year. This number was in line with analysts’ expectations. Aside from that, it was a slower quarter as it produced a significant miss of analysts’ adjusted operating income estimates.
The stock is down 11.9% since reporting and currently trades at $22.87.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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