Why Acuity Brands, Inc. Stock Fell 19% Today

By Anders Bylund Markets Fool.com

What happened

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Acuity Brands (NYSE: AYI) reported first-quarter results in the early morning hours on Monday. In response to the news, shares of the industrial LED lighting specialist fell as much as 18.7% during the morning session.

So what

In the first quarter, Acuity's net sales increased 16% year over year, landing at $851 million. Adjusted earnings rose 13%, to $2.00 per share. Wall Street analysts were looking for earnings of roughly $2.16 per share, based on something like $895 million in top-line sales. The company fell far short of these estimates.

This Acuity BLT-series lighting fixture also features Internet of Things-ready networking tools. Image source: Acuity Brands.

Now what

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Acuity Chairman and CEO Vernon Nagel admitted that sales came in below expectations. Profit margins were also slimmer than planned as the company increased headcount to support sales of Tier 3 and Tier 4 products, which are related to Acuity's Internet of Things ambitions.

"All in all, we had a solid quarter given market conditions," Nagel wrote in a prepared statement. "We believe the softness in demand over the last quarter or so was due to temporary circumstances that for the most part have passed; however, some softness could linger into the second quarter."

From where I sit, this sounds like a minor speed bump in front of an otherwise convincing long-term growth strategy. If you're not buying Acuity on this tempting dip, the stock most certainly belongs on your watch list for promising growth stocks in the tech sector.

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Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.