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Acuity Brands, Inc. (AYI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Acuity Brands, Inc. (AYI)

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Intrinsic Value (DCF)

Current$320.82
→
Intrinsic$385.22
+20%
$257.01$385.22$628.80
Market implies 11% growth for 5 years
AYI shows 20% potential upside using 15% growth — reasonable if fundamentals hold.
At $321, the market prices in 11% annual cash flow growth — a moderate expectation aligned with historical trends (15%).
Range: Bear $257 → Bull $629. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →11%13%15%17%
8%$468$510$555$603
10%$325$354$385$418
12%$246$268$291$316
14%$196$213$231$251

Bull Case

  • Bull case ($629) offers 96% upside at 18% growth, 9% discount
  • 17% margin of safety vs. base case estimate
  • Market-implied growth (11%) ≤ historical CAGR (15%)

Bear Case

  • Bear case ($257) implies 20% downside at 12% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$612.16M
Year 2$703.07M
Year 3$807.49M
Year 4$927.41M
Year 5$1.07B
Terminal$15.67B

📐 Model Inputs

Growth Rate14.9%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$533.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is AYI stock undervalued or overvalued?
🟡 FAIRLY VALUED

AYI trades at $320.82, within 10% of our $388.62 intrinsic value estimate. At 10.0% WACC and 14.9% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $260.73 (bear) to $569.95 (bull).

What is AYI's intrinsic value?

Using a 5-year DCF model: Base FCF of $533M, projected at 14.9% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $582M net debt and dividing by 0.03B shares: Bear $260.73 | Base $388.62 | Bull $569.95. Current price $320.82 implies +4% to base case.

How is AYI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 14.9% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($12.88B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 24.2x.