As of June 10, 2025, Acuity Brands Inc's estimated intrinsic value ranges from $136.47 to $423.74 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $423.74 | +57.1% |
| Discounted Cash Flow (5Y) | $358.15 | +32.8% |
| Dividend Discount Model (Multi-Stage) | $291.23 | +8.0% |
| Dividend Discount Model (Stable) | $193.66 | -28.2% |
| Earnings Power Value | $136.47 | -49.4% |
Is Acuity Brands Inc (AYI) undervalued or overvalued?
With the current market price at $269.72, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Acuity Brands Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.98 | 1.02 |
| Cost of equity | 8.4% | 10.6% |
| Cost of debt | 4.5% | 5.3% |
| Tax rate | 22.6% | 22.8% |
| Debt/Equity ratio | 0.06 | 0.06 |
| After-tax WACC | 8.1% | 10.2% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $358 | $11,765M | 77.4% |
| 10-Year Growth | $424 | $13,792M | 59.6% |
| 5-Year EBITDA | $282 | $9,406M | 71.8% |
| 10-Year EBITDA | $352 | $11,562M | 51.8% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $444M |
| Discount Rate (WACC) | 10.2% - 8.1% |
| Enterprise Value | $4,344M - $5,487M |
| Net Debt | $699M |
| Equity Value | $3,646M - $4,788M |
| Outstanding Shares | 31M |
| Fair Value | $118 - $155 |
| Selected Fair Value | $136.47 |
| Metric | Value |
|---|---|
| Market Capitalization | $8334M |
| Enterprise Value | $9033M |
| Trailing P/E | 19.99 |
| Forward P/E | 15.63 |
| Trailing EV/EBITDA | 8.70 |
| Current Dividend Yield | 23.26% |
| Dividend Growth Rate (5Y) | -3.28% |
| Debt-to-Equity Ratio | 0.06 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $127.12 |
| Discounted Cash Flow (5Y) | 25% | $89.54 |
| Dividend Discount Model (Multi-Stage) | 20% | $58.25 |
| Dividend Discount Model (Stable) | 15% | $29.05 |
| Earnings Power Value | 10% | $13.65 |
| Weighted Average | 100% | $317.60 |
Based on our comprehensive valuation analysis, Acuity Brands Inc's weighted average intrinsic value is $317.60, which is approximately 17.8% above the current market price of $269.72.
Key investment considerations:
Given these factors, we believe Acuity Brands Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.