NEW YORK (TheStreet) -- Lighting products supplier Acuity Brands (AYI) is scheduled to report fiscal third-quarter earnings results Wednesday before the opening bell. Acuity's stock has been on fire, lighting up the market with a 30% gain already in 2015 and dominating the broader averages.
But valuation fears have crept in. Not only is Acuity's stock trading at lifetime-time highs at around $186 a share, but its stock also carries a multiple of 41 compared to a P/E of 21 for the S&P 500 (SPX) index. In other words, if Acuity's shares traded on par with the S&P 500 index, its stock would be valued at around $83 a share and not $182. This $83 a share figure factors in Acuity's fiscal 2014 full-year earnings of $3.97 per share and applies a P/E of 21.
However, in Acuity's case, "expensive" doesn't imply limited value.
Acuity is projected to grow full-year 2015 earnings per share by 35% to $5.36 a share. And as for fiscal 2016, consensus earnings per share estimates call for a 25% year-over-year jump, reaching $6.70. So, while Acuity's stock may trade at twice the market rate, few companies in the S&P 500 index are expected to grow earnings at an average annual two-year rate of 30%.
And here's the thing, those projections may yet be conservative. Why? Average analyst earnings-per-share estimates for Acuity's quarter ending in August have climbed 1.2% in the last three months. Additionally, Acuity's recent $252 million acquisition of Distech Controls may not yet be factored into its 2016 estimates.