Low margins and the volatile nature of the prices is a major risk to its operations. Fluctuations in demand and supply brought about by consumer preferences will have an adverse impact on its earnings. Financial risks would include the inability to pay off its $458 million worth of notes.
The P/E and forward P/E ratio stand at 17.2 and 9.6, respectively – both of these ratios are below the industry average.
Acuity Brands, Inc. (NYSE:AYI)
Acuity Brands, Inc. (NYSE:AYI) was incorporated in September 2007. It provides lighting devices for commercial, institutional, industrial and residential areas in the U.S. alongside international regions such as Europe and Asia. In 2012 the company managed to maintain its position as the industry leader for the fourth consecutive year.
The company showed an increase in revenues of 7.96% year-over-year. Growth in revenues for the last three years amounted to 5.3% while growth in net income touched 11.1% for the same time frame. The quarterly earnings for 2013 stand at $25 million, showing a marked increase of 25% as compared to last year.
The company has been paying out dividends on a consistent basis with the recent quarter’s dividends at $0.13 per share. The free cash flows of the company increased by 2.17% despite an increase in capital expenditure. Therefore growth-dividend policies can be pursued side by side.
Acuity Brands, Inc. (NYSE:AYI) have been able to outperform the S&P400 Mid-Cap index along with the Dow Jones Index in the last three years. However, the company faces several risks. The aggressive pricing adopted by the company and competitive nature of the industry can shrink its profit margins. Changes in technology employed and the advent of new products are serious threats.
The P/E and forward P/E ratio for the stock stand at 27.9 and 19.6, respectively. Furthermore, the P/B and P/S ratio stand at 3.7 and 1.7, respectively.
Conclusion
All of the above mentioned stocks have shown exceptional performance over the past year and have substantial growth potential. These companies have a solid position in their respective markets, and I expect these companies to grow well in the future. These stocks will prove to be good investments for investors looking for growth as well as income.
Ishtiaq Ahmed has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Three Mid-Cap Picks for Solid Gains originally appeared on Fool.com and is written by Ishtiaq Ahmed.
Ishtiaq is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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