Why Shares of Acuity Brands Are Soaring This Week

Starting off October on an auspicious note, shares of Acuity Brands (NYSE: AYI) raced out of the gate to kick begin the new month. The lighting and building management solutions provider reported strong fiscal fourth-quarter 2024 financial results on Tuesday that led investors to believe that it was a bright idea to click the buy button.

According to data provided by S&P Global Market Intelligence, shares of Acuity Brands have climbed 10.4% from the end of trading last week to the end of Thursday's trading session.

What lit up investors' excitement?

Exceeding both top- and bottom-line expectations, Acuity Brands reported revenue and adjusted earnings per share (EPS) of $1.03 billion and $4.30, respectively, for the period ended Aug. 31. Analysts had expected the company would report sales of $1.02 billion and EPS of $4.28. The cash-flow statement also provided a pleasant surprise. Assisted by a 7% year-over-year increase in operating cash flow in Q4 2024, Acuity Brands enjoyed notable free-cash-flow growth for its recently completed fiscal year: $555.2 million compared to $511.4 million for fiscal 2023.

Investors also found inspiration in management's encouraging outlook for 2025. In addition to projecting $3.9 billion to $4.1 billion for net sales, Acuity Brands forecasts adjusted diluted EPS of $16 to $17.50. For context, the company reported net sales of $3.8 billion and adjusted diluted EPS of $15.55 in fiscal 2023.

Is buying this smart building stock a smart idea right now?

After a strong performance in 2024 and continued growth expected in 2025, it's unsurprising that Acuity Brands stock soared this week. With shares now trading at 16.6 times operating cash flow -- a premium to their five-year average of 12.1 -- it may be wise to wait for a pullback before buying the stock.

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