Home » ViA Insights » Case Study » Is Acuity Brand A Good U.S. Company To Invest In?

Is Acuity Brand A Good U.S. Company To Invest In?

HOW DOES THE COMPANY MAKES MONEY?

Based in Atlanta, Georgia, Acuity Brands is a market-leading industrial technology company. They present themselves as service provider to all lighting related solutions across various applications such as residential, institutional, and commercial, along with comprehensive building management solutions. Since they cater to all types of applications, the products they offer range from light emitting diode to incandescent light sources, and their supporting hardware like sensors, inverters, and modular wirings.

WHAT’S THE ONE THING UNIQUE ABOUT THIS COMPANY?

The evolution towards artificial intelligence (AI) and internet-of-things (IoT) have also pushed Acuity Brands to incorporate these components in their product portfolio. Therefore, they uniquely position themselves as the market leader especially in North America, being the solution provider for both hardware and software related to lighting and building management.

REVENUE TREND

With their vast portfolio of products, they have been reporting a slow and steady kind of incremental trend in terms of revenue. In 2017, they have reported a total of USD 3.51 billion and in 2019, the revenue grew by USD 160 million to USD 3.67 billion. Their net income has been relatively stable across these years with USD 0.32 billion in 2017 to USD 0.33 billion in 2019.

Revenue and Net Income from 2017 to 2019 – Morningstar

EARNINGS PER SHARE TREND

Looking at their earnings per share, they had reported an inconsistent amount across the years. In 2017, the EPS reported was USD 7.43 and in 2019, it grew to USD 8.29. Being in the business where the technology is rapidly evolving, Acuity Brands reserves a big chunk of their cash for acquisitions to strengthen their portfolio.

EARNINGS PER SHARE FROM 2017 TO 2019

In their recent earnings call, Acuity Brands have reported a decline in their net sales of USD 776 million as compared to previous year but with an increase in their gross profit margin of 42.2%. The decline in their sales was due to reduction in sales volume impacted primarily as result of COVID19 pandemic. However, contributions from lower costs of selected products/services as well as acquisitions that took place had improved the gross profit margin.

The main drawbacks highlighted by management were the uncertainty revolving demand of their products, the recovery of economy from this pandemic, the tariffs involved in procuring the raw materials as well as the pricing pressure associated with the latter.

Nevertheless, the outlook provided by the management revealed that they continue to demonstrate durability during this hard times, and moving forward, they strive to manage the costs efficiently by making sound investments ventures while expanding the robustness of their product portfolio.

Despite the management express their concerns with the uncertainty due to COVID19 pandemic, the company always tries to strengthen themselves by making strategic decisions as seen recently in their collaboration with Ushio America, Inc.

The agreement here means that Acuity Brands has found another way to create income stream via Ushio America Inc. The product being capitalized thru this partnership is the Care222 UV disinfection system which is highly needed at this time of crisis. In the future, it is not a surprise if offices/home buildings are being installed with one of these hardware as a prerequisite to keep our surroundings sterilised from pathogens. To sum it up, by looking at the product portfolio of Acuity Brands, more strategic partners would be interested to work with them and the win-win partnership will subsequently bring Acuity Brands to the next level.

DISCLOSURE

The above article is for educational purposes only. Under no circumstances does any information provided in the article represent a recommendation to buy, sell or hold any stocks/asset. In no event shall ViA or any Author be liable to any viewers, guests or third party for any damages of any kind arising out of the use of any content shared here including, without limitation, use of such content outside of its intended purpose of investor education, and any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages resulting from such unintended use.

Topics You Might Be Interested In