Valens Equity Weekly Insights for June 14, 2022

June 13, 2022

  • Acuity Brands, Inc. (AYI) is the best positioned company to implement smart, connected lighting solutions as more companies and individuals look to adopt more IoT solutions. It is making smart investments into platforms to support its lighting solutions. Uniform Accounting highlights that the market is pricing in a reversal of recent profitability expansion, but management is confident about its momentum and is aligned to continue executing on improving profitability, signaling the potential for equity upside as the company continues executing.

  • Acuity has been investing heavily in the next wave of connected lights, including solutions that will help buildings manage their systems remotely. Its new innovative lighting solutions and platforms to support those lights will push clients towards a new investment cycle, which should drive profitability in the coming years. If the company is able to continue executing, keeping returns stable or improving, it should be able to beat market expectations.

  • AYI’s management is closely aligned to focus on margins and asset efficiency, which should drive profitability expansion.

  • Management confidence in the Q2 earnings call about managing contract pricing and costs suggest continued strong execution.

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