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.

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.