Acuity Brands (AYI) Falls Further As It's Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Acuity Brands ( AYI) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Acuity Brands as such a stock due to the following factors:

  • AYI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.5 million.
  • AYI has traded 97,955 shares today.
  • AYI traded in a range 230.6% of the normal price range with a price range of $3.80.
  • AYI traded below its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on AYI:

Acuity Brands, Inc. designs, produces, and distributes lighting solutions, components, and services for commercial, institutional, industrial, infrastructure, and residential applications in North America and internationally. The stock currently has a dividend yield of 0.4%. AYI has a PE ratio of 32.8. Currently there are 3 analysts that rate Acuity Brands a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Acuity Brands has been 479,500 shares per day over the past 30 days. Acuity has a market cap of $5.4 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.74 and a short float of 7% with 4.73 days to cover. Shares are up 14.3% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Acuity Brands as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 11.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, AYI has a quick ratio of 2.01, which demonstrates the ability of the company to cover short-term liquidity needs.
  • ACUITY BRANDS INC has improved earnings per share by 38.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ACUITY BRANDS INC increased its bottom line by earning $2.94 versus $2.73 in the prior year. This year, the market expects an improvement in earnings ($3.94 versus $2.94).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. The net income increased by 38.2% when compared to the same quarter one year prior, rising from $31.70 million to $43.80 million.
  • Net operating cash flow has slightly increased to $71.40 million or 4.84% when compared to the same quarter last year. In addition, ACUITY BRANDS INC has also modestly surpassed the industry average cash flow growth rate of 3.11%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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