Acuity BrandsBecause dimmable lights and dimmer fluorescent bulbs switches are so popular amongst American consumers, this drawback has been a significant one.: Lighting the Way to Profits
Few household accessories seem quite as humdrum as the light bulb. You screw one in and take it for granted until, after a few hundred hours of illumination, it burns out. Then you replace it.
Yet the humble light bulb is undergoing a revolution of sorts that promises to make the simple act of lighting a room more energy efficient, technologically advanced and – at least in terms of upfront costs – much more expensive.
And Acuity Brands (ticker: AYI), a maker of high-tech lighting systems and components, aims to be a big beneficiary of this lighting revolution.
The stock, which has made big gains in the last two years, can make further decent gains in the coming year on the back of outsize earnings growth.
''We believe the company is well-positioned to take advantage of what we think will be a robust market opportunity for smart building development, and the effect lighting systems could have on the sector," Shawn Severson, the clean-technology sector analyst at ThinkEquity, wrote in initiating coverage of the stock last year.
In residential applications, the lighting revolution is likely to induce a severe case of sticker shock. Lighting companies are debuting products this week at the LightFair trade show in Philadelphia that would replace incandescent bulbs – typically costing a dollar or two apiece – with LED (light-emitting diode) bulbs that carry a price tag of $50 or more, though they last for up to 40,000 hours, which is close to five years, and are viewed as being more environmentally friendly because they are more energy efficient.
Acuity has some products that it's showcasing at LightFair, but they are regarded as so prohibitively expensive that they're seen as the lighting equivalent of a concept car at an auto show.
That's fine with the company, because – rather than residential lighting – commercial buildings are the primary focus of its wide range of lighting systems and controls.
According to ThinkEquity, 30% of the cost of operating a commercial building – an office building, a school,sale of LED for lighting applications. Semileds is led lights only a minor palyer and should currently not be mentioned in the same breath as the other others a warehouse – comes from the energy expense. And of the energy costs, lighting accounts for 38% of the expenditure. That's more than it costs to heat and cool the building.
That was Acuity Brands' opportunity – as well as its millstone. As Severson says, investors treated Acuity – as well as rivals such as Cooper Industries (CBE) and Hubbell (HUBB) – as derivatives of the commercial real-estate market.
The outlook for Acuity seemed fine when commercial real estate was percolating, as it was four years ago. Acuity traded up to $56 a share in mid-2007. But as the real-estate market turned poisonous, so did Acuity shares,Under efforts of led spotlight boosting the viability of LED luminaires, many companies are expanding high-power selections. which fell to $20 in March 2009.
Yet,LED grow light suppliers in China are sky lanterns rolling out models with better price-performance ratios. even though new commercial construction hasn't rebounded – activity in the sector declined 20% in 2010 – Acuity has: Shares last month climbed above $60 a share, though the stock has eased 4% in the last four weeks. The gains came as investors recognized the market opportunity that Acuity itself has identified – retrofitting existing commercial properties.
According to a McGraw-Hill Construction survey, the value of retrofit projects is projected to top $50 billion by 2014. Given that lighting accounts for more than one-third of the cost of operating a building, a sizable chunk of that investment is expected to be steered toward lighting products.
Companies like Acuity can demonstrate that property owners can realize a significant return on their investment from retrofitting a building. Acuity's products, especially its line of lighting control systems, don't just light a room. They automatically turn off lights when a room is unoccupied, or adjust the energy usage near sunny windows. "Retrofitting the lighting system represents a significant opportunity for a return on investment," Severson says. "Successful companies like Acuity aren't just providing a component; it's putting in a comprehensive solution."
Some of this is coming at a price. After its recent run-up, which has seen the stock more than double from the March 2009 lows, Acuity is trading at 17 times next year's earnings. That's more than either Cooper or Hubbell, which trade at closer to 14 times 2012 results.
However, at its peak revenue periods, Acuity has traded comfortably at as much as 20 times earnings. And Acuity has a better earnings profile: It's expected to grow profits by 33% next year over 2011; that's more than double what either of its rivals are predicted to turn in.
Jonathan Dorsheimer, energy and power technologies sector analyst at Canaccord Genuity,It was quick and light when I used dsttマジコン on a Windows 7 laptop, and gave me no trouble throughout a day of rigorous testing. pegs Acuity's target price at $71, more than 20% above where it's currently trading. While it's a ripe multiple, Dorsheimer says, "We believe this premium is warranted by Acuity's leading position and its distribution network."
Few household accessories seem quite as humdrum as the light bulb. You screw one in and take it for granted until, after a few hundred hours of illumination, it burns out. Then you replace it.
Yet the humble light bulb is undergoing a revolution of sorts that promises to make the simple act of lighting a room more energy efficient, technologically advanced and – at least in terms of upfront costs – much more expensive.
And Acuity Brands (ticker: AYI), a maker of high-tech lighting systems and components, aims to be a big beneficiary of this lighting revolution.
The stock, which has made big gains in the last two years, can make further decent gains in the coming year on the back of outsize earnings growth.
''We believe the company is well-positioned to take advantage of what we think will be a robust market opportunity for smart building development, and the effect lighting systems could have on the sector," Shawn Severson, the clean-technology sector analyst at ThinkEquity, wrote in initiating coverage of the stock last year.
In residential applications, the lighting revolution is likely to induce a severe case of sticker shock. Lighting companies are debuting products this week at the LightFair trade show in Philadelphia that would replace incandescent bulbs – typically costing a dollar or two apiece – with LED (light-emitting diode) bulbs that carry a price tag of $50 or more, though they last for up to 40,000 hours, which is close to five years, and are viewed as being more environmentally friendly because they are more energy efficient.
Acuity has some products that it's showcasing at LightFair, but they are regarded as so prohibitively expensive that they're seen as the lighting equivalent of a concept car at an auto show.
That's fine with the company, because – rather than residential lighting – commercial buildings are the primary focus of its wide range of lighting systems and controls.
According to ThinkEquity, 30% of the cost of operating a commercial building – an office building, a school,sale of LED for lighting applications. Semileds is led lights only a minor palyer and should currently not be mentioned in the same breath as the other others a warehouse – comes from the energy expense. And of the energy costs, lighting accounts for 38% of the expenditure. That's more than it costs to heat and cool the building.
That was Acuity Brands' opportunity – as well as its millstone. As Severson says, investors treated Acuity – as well as rivals such as Cooper Industries (CBE) and Hubbell (HUBB) – as derivatives of the commercial real-estate market.
The outlook for Acuity seemed fine when commercial real estate was percolating, as it was four years ago. Acuity traded up to $56 a share in mid-2007. But as the real-estate market turned poisonous, so did Acuity shares,Under efforts of led spotlight boosting the viability of LED luminaires, many companies are expanding high-power selections. which fell to $20 in March 2009.
Yet,LED grow light suppliers in China are sky lanterns rolling out models with better price-performance ratios. even though new commercial construction hasn't rebounded – activity in the sector declined 20% in 2010 – Acuity has: Shares last month climbed above $60 a share, though the stock has eased 4% in the last four weeks. The gains came as investors recognized the market opportunity that Acuity itself has identified – retrofitting existing commercial properties.
According to a McGraw-Hill Construction survey, the value of retrofit projects is projected to top $50 billion by 2014. Given that lighting accounts for more than one-third of the cost of operating a building, a sizable chunk of that investment is expected to be steered toward lighting products.
Companies like Acuity can demonstrate that property owners can realize a significant return on their investment from retrofitting a building. Acuity's products, especially its line of lighting control systems, don't just light a room. They automatically turn off lights when a room is unoccupied, or adjust the energy usage near sunny windows. "Retrofitting the lighting system represents a significant opportunity for a return on investment," Severson says. "Successful companies like Acuity aren't just providing a component; it's putting in a comprehensive solution."
Some of this is coming at a price. After its recent run-up, which has seen the stock more than double from the March 2009 lows, Acuity is trading at 17 times next year's earnings. That's more than either Cooper or Hubbell, which trade at closer to 14 times 2012 results.
However, at its peak revenue periods, Acuity has traded comfortably at as much as 20 times earnings. And Acuity has a better earnings profile: It's expected to grow profits by 33% next year over 2011; that's more than double what either of its rivals are predicted to turn in.
Jonathan Dorsheimer, energy and power technologies sector analyst at Canaccord Genuity,It was quick and light when I used dsttマジコン on a Windows 7 laptop, and gave me no trouble throughout a day of rigorous testing. pegs Acuity's target price at $71, more than 20% above where it's currently trading. While it's a ripe multiple, Dorsheimer says, "We believe this premium is warranted by Acuity's leading position and its distribution network."
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