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Acuity Brands: Rolling Downhill

Jun. 11, 2019 12:30 PM ETAcuity Brands, Inc. (AYI)1 Comment
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  • Acuity has lost half its price over the last few years.
  • The stock still seems to be overvalued.
  • Uncertainties about growth potential and legal proceedings are problematic for Acuity.

Acuity Brands, Inc. (NYSE:AYI) is a holding company, which owns companies operating in the lighting industry. Its brands are considered to be some of the best in the industry. The company is based in Atlanta and employs over 13,000 people.

Acuity designs and produces everything from lighting controls and building system controllers to power supplies and integrated systems for industrial purposes. Acuity was trading at over twice its current price towards the end of 2016. As such, value hunters have been eagerly watching Acuity so as to determine whether it is a worthwhile investment at its current price.

While Acuity looks like a decent company from a non-technical standpoint, our valuation metrics show otherwise. As such, we are delving deep into Acuity to determine whether this is a place where your hard-earned cash should go or not.

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Acuity is poised to take advantage of the IoT industry

The Internet of Things (IoT), along with cloud computing, seems to be the next big thing in technology. IoT essentially refers to the concept of connecting everything in your life to the internet to achieve complete control of everything you do. For example, you could turn your lights on or off from your mobile phone while on vacation.

The total number of IoT devices is expected to be over 20 Billion by the end of 2020. On top of that, the estimated investment to be made by companies in IoT is $15 trillion between 2017 and 2025. Acuity has two brands that are currently operating in the IoT space and could garner a significant portion of the industry.

Atrius is a brand that is focused on using lighting grids as sensors and collecting data for various companies, while DGLogik is focused on the development side of IoT as it

This article was written by

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TTCR Long/short equity, value, growth

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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