Should you invest in Acuity Brands after declaring dividends?

On Friday, Acuity Brands Inc. (NYSE:AYI) announced a quarterly dividend of $0.13 payable on 2nd August. The company will announce its fiscal third-quarter results next week. Shares gained marginally by 0.77%. 

Is Acuity Brands a buy ahead of earnings?

Acuity Brands’ latest dividend declaration of $0.13 per share reflects a dividend yield of just 0.27%. It explains why investors did not show enough excitement to drive the stock price higher on Friday.

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The company’s valuation is relatively attractive, but growth is not as exciting. AYI stock trades at a price-earnings ratio of 28.59 and a forward P/E of 19.85. According to analyst estimates, earnings will fall by 24% this year before bouncing back by 6.24% next year.

Technical overview: AYI looks poised for a pullback

Acuity Brands stock is trading at a new 3-year high after Friday’s gain. However, it is now closer to overbought conditions in the 14-day RSI. a pullback looks imminent under current conditions.

Investors can target pullback profits at around $185.37 and $177.15. The key resistance levels are $200.58 and $207.56.

Bottom line: It is best to target the pullback

AYI shares look destined for a short-term pullback regardless of what happens after that. Therefore, investors could either wait for shares to retreat before buying or short the stock.

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