As of June 18, 2025, Acuity Brands Inc has a Discounted Cash Flow (DCF) derived fair value of $418.28 per share. With the current market price at $271.03, this represents a potential upside of 54.3%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $353.59 |
| DCF Fair Value (10-year) | $418.28 |
| Potential Upside (5-year) | 30.5% |
| Potential Upside (10-year) | 54.3% |
| Discount Rate (WACC) | 8.2% - 10.3% |
Revenue is projected to grow from $3841 million in 08-2024 to $5505 million by 08-2034, representing a compound annual growth rate of approximately 3.7%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 08-2024 | 3841 | 3% |
| 08-2025 | 4066 | 6% |
| 08-2026 | 4147 | 2% |
| 08-2027 | 4356 | 5% |
| 08-2028 | 4495 | 3% |
| 08-2029 | 4654 | 4% |
| 08-2030 | 4900 | 5% |
| 08-2031 | 4998 | 2% |
| 08-2032 | 5291 | 6% |
| 08-2033 | 5397 | 2% |
| 08-2034 | 5505 | 2% |
Net profit margin is expected to improve from 11% in 08-2024 to 22% by 08-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 08-2024 | 423 | 11% |
| 08-2025 | 533 | 13% |
| 08-2026 | 626 | 15% |
| 08-2027 | 739 | 17% |
| 08-2028 | 842 | 19% |
| 08-2029 | 950 | 20% |
| 08-2030 | 1016 | 21% |
| 08-2031 | 1052 | 21% |
| 08-2032 | 1131 | 21% |
| 08-2033 | 1170 | 22% |
| 08-2034 | 1211 | 22% |
with a 5-year average of $57 million. Projected CapEx is expected to maintain at approximately 2% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 08-2025 | 59 |
| 08-2026 | 63 |
| 08-2027 | 65 |
| 08-2028 | 65 |
| 08-2029 | 67 |
| 08-2030 | 69 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 55 |
| Days Inventory | 68 |
| Days Payables | 57 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 6M/2025 | 372 | 78 | 31 | 40 | 223 |
| 2026 | 867 | 184 | 64 | (15) | 635 |
| 2027 | 1015 | 217 | 67 | 33 | 699 |
| 2028 | 1149 | 247 | 69 | 27 | 806 |
| 2029 | 1290 | 279 | 71 | 17 | 923 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 353.59 | 30.5% |
| 10-Year DCF (Growth) | 418.28 | 54.3% |
| 5-Year DCF (EBITDA) | 280.99 | 3.7% |
| 10-Year DCF (EBITDA) | 349.74 | 29.0% |
Is Acuity Brands Inc (AYI) a buy or a sell? Acuity Brands Inc is definitely a buy. Based on our DCF analysis, Acuity Brands Inc (AYI) appears to be significantly undervalued with upside potential of 54.3%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $271.03.