In the past four quarters it achieved a 19.6% return on stockholders’ equity, which I consider excellent.įor the past six years, Acuity has been buying back its own stocks. It has been profitable in each of the past 22 years. Its stock fell 11% in the second quarter, perhaps because investors fear a further decline in commercial construction.Īcuity boasts a strong balance sheet, with debt only 30% of stockholders’ equity. Acuity Brands AYIĪcuity, based in Atlanta, Georgia, provides lighting products for factories, office buildings, stores, malls and residences. It now sells for three times recent earnings and less than six times estimated earnings for this calendar year.
Just recently, oil prices and the crack spread have been dropping, which is why Valero’ stock lost 15% of its value last quarter. To be sure, as people increasingly choose electric cars, that will crimp gasoline demand, but I figure the transition will take a decade.
Communities oppose new refineries, so few if any will be built. I think the spread will remain above normal for the next two or three years. According to Bloomberg, the average spread from 1985 to 2021 was $10.50 a barrel.
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Lately, the spread (the price of two barrels of gasoline plus one barrel of heating oil, minus the price of three barrels of crude oil) has been around $35, which is good for refiners like Valero. The price gap between the price of oil and the price of refined products is called the crack spread. In a refiner’s world, the ideal is for oil to be cheap while gasoline, heating oil and jet fuel are expensive. Valero, with headquarters in San Antonio, Texas, is a refiner and marketer.
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