Light Up Your Portfolio with Acuity (AYI) - Barron's
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Price: $327.48 +0.65%
Rating Summary:
12 Buy, 16 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 22 | New: 15
Rating Summary:
12 Buy, 16 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 22 | New: 15
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Acuity Brands, Inc. (NYSE: AYI) shares are trading higher Wednesday as Barron's pegs it as a big beneficiary to the eco-friendly lighting revolution.
Acuity is a diversified manufacturer of lighting fixtures, lighting controls, and related products and services. You might see their products in stores, on the road, in the office, or possibly your own home.
Lighting companies are introducing LED bulbs that last about five-years with 40,000 hours of run time and are more environmentally friendly than incandescent bulbs. The drawback? Anyone who has shopped in their local Wal-Mart (NYSE: WMT) or Home Depot (NYSE: HD) is drawn in by the bulbs, but then pushed back by the $50 per bulb price tag. With a multitude of light outlets in homes, such a price can amount to hundreds of dollars to the average consumer.
Acuity, however, as Barron's points out, is now switching its focus to commercial operations, where costs savings are looked at more logically over the long-run rather than short-term. About 30 percent of the cost to operate a commercial building comes from energy expense, according to one analyst, with lighting amounting to 38 percent of that expense, or 11.4 percent of overall costs.
Barron's notes traders treat Acuity, as well as rivals Cooper Industries (NYSE: CBE) and Hubbell (NYSE: HUB-B), as derivatives of the commercial real-estate market. The side-effect is that after trading north of $56 per share in mid-2007, Acuity shares dropped to $20 in March 2009 as the commercial real estate bubble collapsed.
Although the commercial real estate market hasn't rebounded quite as vigorously as hoped, Acuity shares have performed strong recently and are now trading just under $60. Investors may be beginning to realize the potential to retrofit existing properties with new lighting. One McGraw-Hill Construction survey has the total value of all retrofit projects providing revs of $50 billion by 2014, with about $15 billion going towards lighting.
Technology is a key factor in Acuity's sales to larger commercial projects: lights turn off when no one is in the room, or adjust energy usage when near sunny windows.
Shares of Acuity are going for about 17x forward earnings, a little pricey when compared with 14x at competitors, but cheap when the stock has comfortably traded at 20x during its last run up. Additionally, the earnings profile is solid for Acuity, with profits expected to grow 33 percent in 2012, about double when compared with competitors.
Acuity is a diversified manufacturer of lighting fixtures, lighting controls, and related products and services. You might see their products in stores, on the road, in the office, or possibly your own home.
Lighting companies are introducing LED bulbs that last about five-years with 40,000 hours of run time and are more environmentally friendly than incandescent bulbs. The drawback? Anyone who has shopped in their local Wal-Mart (NYSE: WMT) or Home Depot (NYSE: HD) is drawn in by the bulbs, but then pushed back by the $50 per bulb price tag. With a multitude of light outlets in homes, such a price can amount to hundreds of dollars to the average consumer.
Acuity, however, as Barron's points out, is now switching its focus to commercial operations, where costs savings are looked at more logically over the long-run rather than short-term. About 30 percent of the cost to operate a commercial building comes from energy expense, according to one analyst, with lighting amounting to 38 percent of that expense, or 11.4 percent of overall costs.
Barron's notes traders treat Acuity, as well as rivals Cooper Industries (NYSE: CBE) and Hubbell (NYSE: HUB-B), as derivatives of the commercial real-estate market. The side-effect is that after trading north of $56 per share in mid-2007, Acuity shares dropped to $20 in March 2009 as the commercial real estate bubble collapsed.
Although the commercial real estate market hasn't rebounded quite as vigorously as hoped, Acuity shares have performed strong recently and are now trading just under $60. Investors may be beginning to realize the potential to retrofit existing properties with new lighting. One McGraw-Hill Construction survey has the total value of all retrofit projects providing revs of $50 billion by 2014, with about $15 billion going towards lighting.
Technology is a key factor in Acuity's sales to larger commercial projects: lights turn off when no one is in the room, or adjust energy usage when near sunny windows.
Shares of Acuity are going for about 17x forward earnings, a little pricey when compared with 14x at competitors, but cheap when the stock has comfortably traded at 20x during its last run up. Additionally, the earnings profile is solid for Acuity, with profits expected to grow 33 percent in 2012, about double when compared with competitors.
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