Acuity Brands (AYI) & AZZ (AZZ) Head-To-Head Analysis

Acuity Brands (NYSE: AYI) and AZZ (NYSE:AZZ) are both construction companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, valuation, earnings and dividends.

Volatility & Risk

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Acuity Brands has a beta of 1.33, indicating that its share price is 33% more volatile than the S&P 500. Comparatively, AZZ has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500.

Institutional and Insider Ownership

92.6% of AZZ shares are held by institutional investors. 1.5% of Acuity Brands shares are held by insiders. Comparatively, 0.0% of AZZ shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Acuity Brands and AZZ’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Acuity Brands $3.51 billion 1.57 $321.70 million $7.96 16.40
AZZ $858.93 million 1.38 $60.92 million $2.50 18.32

Acuity Brands has higher revenue and earnings than AZZ. Acuity Brands is trading at a lower price-to-earnings ratio than AZZ, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Acuity Brands and AZZ, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acuity Brands 1 7 5 0 2.31
AZZ 0 1 0 0 2.00

Acuity Brands presently has a consensus target price of $177.82, indicating a potential upside of 36.24%. AZZ has a consensus target price of $52.00, indicating a potential upside of 13.54%. Given Acuity Brands’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Acuity Brands is more favorable than AZZ.

Profitability

This table compares Acuity Brands and AZZ’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Acuity Brands 9.68% 20.56% 11.89%
AZZ 6.27% 9.65% 5.13%

Dividends

Acuity Brands pays an annual dividend of $0.52 per share and has a dividend yield of 0.4%. AZZ pays an annual dividend of $0.68 per share and has a dividend yield of 1.5%. Acuity Brands pays out 6.5% of its earnings in the form of a dividend. AZZ pays out 27.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AZZ has increased its dividend for 4 consecutive years. AZZ is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Acuity Brands beats AZZ on 13 of the 17 factors compared between the two stocks.

About Acuity Brands

Acuity Brands, Inc. provides lighting and building management solutions and services for commercial, institutional, industrial, infrastructure, and residential applications in North America and internationally. The company offers lighting and controls products and solutions, such as recessed, surface, and suspended lighting; down, decorative, emergency and exit, track, day, special-use, street and roadway, parking garage, landscape, and underwater lighting; area pedestrian, flood, and decorative site lighting; occupancy sensors; photo controls; relay panels; architectural dimming panels; and integrated lighting controls systems. It also provides modular wiring products, light emitting diode drivers, glass products, and inverters; and services across applications that primarily relate to monitoring and controlling lighting systems through network technologies and the commissioning of control systems. The company markets its products under the Lithonia Lighting, Holophane, Peerless, Gotham, Mark Architectural Lighting, Winona Lighting, Juno, Indy, Aculux, Healthcare Lighting, Hydrel, American Electric Lighting, Carandini, Antique Street Lamps, Sunoptics, RELOC Wiring Solutions, eldoLED, Distech Controls, Acuity Controls, and Atrius brand names. It serves electrical distributors, retail home improvement centers, electric utilities, lighting showrooms, national accounts, government entities and municipalities, original equipment manufacturers, value-added resellers, utility distributors, system integrators, developers, and energy service companies, as well as new construction, renovation, and maintenance and repair markets. The company sells its products through independent sales agents, electrical distributors, system integrators, and sales representatives, as well as through a network of distribution centers, regional warehouses, and commercial warehouses. Acuity Brands, Inc. was founded in 2001 and is headquartered in Atlanta, Georgia.

About AZZ

AZZ Inc. provides galvanizing services, welding solutions, specialty electrical equipment, and highly engineered services to the power generation, transmission, distribution, refining, and industrial markets. The company operates through two segments, Energy and Galvanizing Services. The Energy segment provides specialized products and services designed to support industrial, nuclear, and electrical applications. This segment offers custom switchgear, electrical enclosures, medium and high voltage bus ducts, explosion proof and hazardous duty lighting, nuclear safety-related equipment, and tubular products to multi-national companies, and small independent companies. This segment sells its products through manufacturers' representatives, distributors, agents, and internal sales force. The Galvanizing Services segment offers hot dip galvanizing services to the steel fabrication industry. This segment serves fabricators or manufacturers that provide services to the electrical and telecommunications, bridge and highway, petrochemical, and general industrial markets, as well as original equipment manufacturers. As of February 28, 2017, the company operated 41 galvanizing plants located in Alabama, Arkansas, Arizona, Colorado, Indiana, Illinois, Louisiana, Kentucky, Minnesota, Mississippi, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Tennessee, Texas, Virginia, and West Virginia in the United States; and Ontario, Quebec, and Nova Scotia, Canada. AZZ incorporated was founded in 1956 and is based in Fort Worth, Texas.

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