George Young is co-portfolio manager of the $241 million Villere Balanced Fund (VILLX), New Orleans. Villere.com
This week’s Stock of the Week has been making a push into high-efficiency lighting as well as services that keep consumers engaged and informed while shopping.
Acuity Brands (AYI), which designs and produces lighting products and controls primarily for commercial, industrial and institutional customers, has made a major push into LEDs over the past four years.
LEDs, which are much more efficient than incandescent lights and less harsh than fluorescents, last so long that businesses rarely need to maintain or change them—cutting their costs. LED penetration is just 5%, so there’s a lot of room for growth.
Acuity also offers the Indoor Positioning System, which allows retailers to interact with shoppers through a mobile-phone app. This works in part like an indoor GPS system and can help shoppers navigate a store as well as connect with a sales associate, receive in-store promotions and research products.
Many Acuity components come from Mexico, and concern about higher prices caused by President Donald Trump’s talk about imposing a tariff on Mexican imports has held back the stock. But Acuity makes most of its money from its installation of its products so any price increase that happens when and if a tariff is imposed should have minimal impact on earnings.
Revenue of $3.3 billion in fiscal 2016 should rise to $3.6 billion this fiscal year and $3.9 billion in fiscal 2018. The small dividend of $0.52/share/yr. recently yielded 0.25% and appears secure.
Fiscal yr.: Aug. Earnings per share: 2018 est./$9.80…2017 est./$8.45…2016/$7.84.
George Young is co-portfolio manager of the $350 million Villere Balanced Fund (VILLX), New Orleans. Villere.com