Why Acuity Brands, Inc. Stock Fell 19% Today

-- http://www.fool.com/investing/2017/01/09/why-acuity-brands-inc-stock-fell-19-today.aspx

What happened

Acuity Brands (NYSE:AYI) reported first-quarter results in the early morning hours on Monday. In response to the news, shares of the industrial LED lighting specialist fell as much as 18.7% during the morning session.

So what

In the first quarter, Acuity’s net sales increased 16% year over year, landing at $851 million. Adjusted earnings rose 13%, to $2.00 per share. Wall Street analysts were looking for earnings of roughly $2.16 per share, based on something like $895 million in top-line sales. The company fell far short of these estimates.

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This Acuity BLT-series lighting fixture also features Internet of Things-ready networking tools. Image source: Acuity Brands.

Now what

Acuity Chairman and CEO Vernon Nagel admitted that sales came in below expectations. Profit margins were also slimmer than planned as the company increased headcount to support sales of Tier 3 and Tier 4 products, which are related to Acuity’s Internet of Things ambitions.

“All in all, we had a solid quarter given market conditions,” Nagel wrote in a prepared statement. “We believe the softness in demand over the last quarter or so was due to temporary circumstances that for the most part have passed; however, some softness could linger into the second quarter.”

From where I sit, this sounds like a minor speed bump in front of an otherwise convincing long-term growth strategy. If you’re not buying Acuity on this tempting dip, the stock most certainly belongs on your watch list for promising growth stocks in the tech sector.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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