# Acuity (AYI)

Sector: Lighting & building technology

| Field | Value |
|---|---|
| Price | $303.25 |
| Fair value (Analysts) | $388.00 |
| Discount to fair value | 21.8% |
| Fair value uncertainty (Analysts) | High |
| Economic moat (Analysts) | Narrow |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2.43 |
| Data as of | 2026-10-16 |
| Next earnings | 2027-01-07 (estimate) |

## In short

The market prices Acuity for flat lighting sales and lower lighting margins, and steady lighting volume with fast growth in Intelligent Spaces through fiscal 2027 can close the gap.

## Themes and gap

- Themes: Tariffs and trade (trade-tariffs), Interest rates (interest-rates)
- Gap type: Can close (closable)
- Why: The Q1 fiscal 2027 report in January 2027 and the next two quarters show whether lighting sales stop falling while Intelligent Spaces keeps growing.

## About

Acuity is an industrial technology company. Acuity Brands Lighting (ABL) makes lighting and lighting controls for commercial, institutional and other buildings, mostly in North America. Acuity Intelligent Spaces (AIS) sells building management systems and an audio, video and control platform for buildings. Fiscal 2026, which ended on August 31, 2026, had net sales of $4.6 billion. ABL had $3.6 billion of these sales and AIS had $1.1 billion. AIS grew 44.8% in fiscal 2026 and earns a higher margin. Acuity has about 13,000 employees.

## Thesis

The market prices Acuity for flat lighting sales and lower lighting margins. ABL net sales fell 1.0% in fiscal 2026, and the ABL adjusted operating margin fell 130 basis points to 18.8% in Q4 fiscal 2026. ABL depends on construction and renovation of commercial buildings, which grows slowly when interest rates are high. Tariffs also raised costs in 2025 and 2026. AIS grows fast, but it is still less than a quarter of sales. For the gap to close, three things must be true. ABL sales must stop falling and its margin must hold near 18%, helped by the product, supply chain and footprint actions of Q4 fiscal 2026. AIS must keep growing in double digits with an adjusted operating margin near 23%. Free cash flow must stay near the $747.9 million of fiscal 2026, so that buybacks and acquisitions continue. The Q1 fiscal 2027 report, estimated for about January 7, 2027, gives the first test. The next two quarterly reports show the trend for fiscal 2027. If these checks pass, the gap can close over the next three to five quarters. The main reason it may not close is a weak market for commercial buildings, which Acuity cannot control.

## Checkpoints

- Jan 7, 2027 (estimate): Q1 fiscal 2027 earnings: lighting volume. Status: Pending. Watch: ABL sales flat or higher with an adjusted margin near 18% and AIS growth in double digits pass; another fall in ABL sales or a lower margin fail.
- Apr 1, 2027 (estimate): Q2 fiscal 2027 earnings: AIS growth. Status: Pending. Watch: AIS sales growth in double digits with an adjusted operating margin near 23% passes; slower AIS growth or margin pressure fails.

## Balance sheet

- Cash: $636M
- Debt: $697M
- Net debt: $61M
- EBITDA, last 12 months: $892M
- Net debt / EBITDA: 0.1× (low)
- Interest cover: 28×
- Debt due within 12 months: $200M

Acuity has low debt. At August 31, 2026, debt was $697.4 million: $200.0 million due within 12 months and $497.4 million of long-term debt. Cash was $636.3 million, up from $422.5 million a year earlier, so net debt was about $61 million. Adjusted EBITDA was $892.0 million in fiscal 2026. Operating profit of $713.7 million covered net interest expense of $25.6 million about 28 times. Free cash flow was $747.9 million. The new $800 million revolving credit facility matures in May 2031, and its covenant limits net debt to 3.75 times EBITDA.

As of 2026-08-31.

Sources:

- https://www.sec.gov/Archives/edgar/data/1144215/000114421526000047/ayi-20261001x8xk_ex991.htm
- https://www.sec.gov/Archives/edgar/data/1144215/000119312526221945/d63196d8k.htm

## Recent events

- 2026-10-01: Acuity reported Q4 fiscal 2026 results. Net sales rose 2.9% to $1.2 billion, and diluted EPS was $5.63. Adjusted diluted EPS rose 11.0% to $5.77. AIS sales rose 16.6%, while ABL sales fell 0.4%. The quarter included $44.9 million of tariff refunds and $17.8 million of special charges, which the company excludes from adjusted results.
- 2026-10-01: For fiscal 2026, net sales rose 6.8% to $4.6 billion and adjusted diluted EPS rose 10.5% to $19.90. Cash flow from operations was $825.6 million. Acuity repaid $200 million of its term loan, raised its dividend by 18% and bought back more than 940,000 shares for $287.2 million.
- 2026-09-29: Acuity added Nick Tzitzon, Vice Chairman of ServiceNow, to its board, effective September 24, 2026. The board grew from nine to ten directors.
- 2026-05-08: Acuity signed a new unsecured revolving credit facility of $800 million that matures in May 2031. It replaced the credit agreement of 2022.

## Risks

- Medium: ABL is most of the sales and depends on commercial construction and renovation. High interest rates or a weaker economy can reduce lighting demand further. ABL sales fell 1.0% in fiscal 2026.
- Medium: Acuity pays tariffs on imported products and components. New tariffs raise costs, and price increases may not cover them. The tariff refunds of $44.9 million in Q4 fiscal 2026 are a one-time item.
- Low: AIS competes with large building technology companies. Growth depends on new products and on acquisitions, and an acquisition that fails can reduce returns.
- Low: Acuity took $17.8 million of special charges in Q4 fiscal 2026 for changes to the ABL product portfolio, supply chain and footprint. If these changes do not give the expected savings, the ABL margin can fall further.

## Links

- Page: https://picks.kamadorueda.com/company/AYI/
- History of changes: https://picks.kamadorueda.com/company/AYI/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/AYI.json

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