Bull of the Day: Acuity Inc. (AYI)

Acuity Inc. AYI is a market-beating, high-tech lighting, energy efficiency, and building systems stock on the cusp of a potential breakout, while trading at value-stock levels.

AYI benefits from reshoring, AI data center expansion, and the broader push for energy efficiency and connected smart spaces across the economy. Acuity completed two acquisitions in FY25 and posted a beat-and-raise Q4 FY25 report in early October.

The industrial technology company is expected to post double-digit earnings growth in FY26 and FY27, and its upbeat earnings estimates have earned AYI a Zacks Rank #1 (Strong Buy).

Acuity stock has soared 1,200% in the past 20 years, crushing the S&P 500. Despite trading near its recent all-time highs, the dividend-paying stock trades at a 40% discount to its peaks on the valuation front—which is an increasingly attractive quality for best-in-class stocks in a seemingly overheated market.

Industrial Technology Stock AYI is a Great Buy-and-Hold Investment

In its own words, Acuity uses “technology to solve problems in spaces, light, and more things to come.” AYI reports via Acuity Brands Lighting and Acuity Intelligent Spaces, aiming to grow across lighting, lighting controls, building management solutions, as well as audio, video, control platform solutions, and beyond.

The Atlanta-based firm’s growing portfolio of lighting and connected smart building solutions operates across the entire economy, from commercial office spaces, retail, and residential to industrial, infrastructure, and healthcare.

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Acuity’s lighting offerings are at the cutting edge of the modern connected world, focused on saving energy and constantly adapting to current needs. Beyond lighting, Acuity's technologies helps control and improve systems like heating, air conditioning, security, audio/video tech, and more. 

Connected smart offices and buildings are the future as companies of all shapes and sizes race to become as efficient and adaptable as possible. 

Acuity’s portfolio is also prepared to grow alongside the rise of power-hungry artificial intelligence data centers desperate to save every last bit of energy they can. Broader long-term trends across reshoring and infrastructure spending provide additional wind in AYI’s sails.

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The company boosted its portfolio via two acquisitions (QSC and M3 Innovation) in fiscal 2025. The company also raised its dividend by 13% last year, while boasting a low payout ratio of 4%, which provides it with long-term runway for more hikes.

AYI posted solid beat-and-raise fourth quarter FY25 results on October 1. It grew its adjusted earnings per share (EPS) by 16% in fiscal 2025 and its revenue by 13%.

The company is set to follow that up with 10% revenue growth in FY26 and 5.4% growth in FY27 to reach $5 billion—up from $3.8 billion in FY24.

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The industrial smart lighting company is projected to grow its adjusted EPS by roughly 10% in FY26 and FY27.

AYI has topped our quarterly earnings estimates for five years running. More importantly, its EPS revisions picture began to climb again after its strong Q4, earning Acuity a Zacks Rank #1 (Strong Buy), and restarting its strong upward earnings revisions trend over the past five years.

Acuity is gaining more attention from Wall Street recently. Zacks has nine brokerage recommendations for AYI, up from seven three months ago, with six coming in at “Strong Buys.” Plus, the company has a solid balance sheet that will support further expansion, dividends, and other initiatives that will benefit investors in the long run.

Buy Top-Ranked AYI Stock for Value and Breakout Potential

Acuity skyrocketed 1,200% over the past 20 years, more than doubling the S&P 500. The stock has climbed 72% in the past decade to outclimb its Zacks Business Services sector’s 55%.

Despite this run, AYI didn’t break out meaningfully above its previous 2016 peaks until the last year. 

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Its 110% charge in the past two years helped it wash away a rough stretch from 2016 to the stock market’s Covid lows in 2020. The stock is trading just below its new all-time highs and 6% under its average Zacks price target.

AYI completed a bullish golden cross in early August, with its 50-day moving average crossing above its 200-day. On top of that, its long-term 21-week moving average crossed above its 50-week in September.

The stock might face selling pressure in the short-term and possibly test its 21-day, 50-day, or even 200-day moving average. Pullbacks to those levels could mark strong entry points for traders.

Long-term investors might not want to play the market-timing game on AYI stock, given its broader bull case that’s cemented by its valuation.

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Acuity trades at a 10% discount to its Zacks sector, even though it has outperformed that group. Better yet, AYI trades at a 40% discount to its highs and near its 20-year median at 19.1X forward 12-month earnings.

At the same time, the AI-boosted rebound has the S&P 500 trading near some of its highest valuation levels in the past 20 years.  

Acuity’s valuation levels, coupled with its growth outlook and other key fundamentals, could help it gain even more momentum and attention from Wall Street.  

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This article originally published on Zacks Investment Research (zacks.com).

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