Acuity Brands, Inc.’s (AYI - Free Report) Atrius Internet of Things (IoT) Partner ecosystem was recently joined by C5MI. Under the collaboration, C5MI will function as a reseller and a development partner using Atrius’ location-based services to optimize its “Industry 4.0” digital manufacturing software and services. Industry 4.0 is a smart manufacturing technology that connects machines and systems to help businesses create intelligent networks. Notably, C5MI is a YASH Technologies company and a leading business information technology consulting firm.
How Atrius Benefits From the Tie-up
C5MI’s digital manufacturing services include Live Factory software that connects the shop floor to the top floor by gathering and presenting data, thereby producing a Common Operational Picture of the manufacturing floor. Atrius’ location-based services enable real-time tracking of the exact location and movement of assets, including parts, assembled products and equipment, which help in maintaining efficiency in materials movement and maintenance processes. C5MI’s business and IoT experience coupled with Atrius capabilities will be a compelling value driver for customers.
Key Growth Strategies
Acuity Brands’ diversified portfolio of innovative lighting control solutions and energy-efficient luminaries is a plus. Apart from an attractive business model, the company is working on smart business strategies to achieve consistent growth in sales and earnings. Notably, net sales growth of 4.4% in the first nine months of fiscal 2019 was primarily driven by a 5% increase in volume and 1% favorable impact from acquisitions. Overall, the company witnessed greater shipments across key sales channels and geographies.
However, over the past few quarters, the U.S lighting industry has been witnessing weak demand for luminaries. Apart from this, despite reporting a year-over-year rise in fourth-quarter fiscal 2019 earnings, the company is cautiously optimistic about fiscal 2020 due to U.S.-China trade tensions and tariffs. Acuity Brands continues to expect sluggish market demand for lighting products.
Owing to this weakness, the company’s shares have registered tepid growth year to date, only 2.5%. This compares unfavorably with the industry’s 2.9% growth.
For first-quarter fiscal 2020, it projects net sales decline in mid-to-high single-digit range compared with fiscal first-quarter 2019. The downbeat projection is largely because of the pull forward of orders by customers as a result of price increases and its efforts eliminate less profitable products from the portfolio.
Nonetheless, Acuity Brands’ consistent focus on innovation and partnerships in response to rapidly-changing market trends will likely drive growth. In fiscal 2019, it introduced almost 100 product families to its industry-leading portfolio, gaining market share in product categories and sales channels. Its tier 3 and 4 solutions grew approximately 15% and contributed nearly 20% to net sales in fiscal 2019. Meanwhile, it plans to introduce more than 100 products in fiscal 2020.
Notably, its Atrius-based IoT luminaires and solutions in the retail segment are becoming the industry standard. The company is focused on expanding these solutions in other channels. Atrius is an optimal platform solution with proven capabilities to scale for large enterprises, which is a great match for C5MI’s business.
Zacks Rank & Stocks to Consider
Acuity Brands currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the Construction sector include Beazer Homes USA, Inc. (BZH - Free Report) , KB Home (KBH - Free Report) and M.D.C. Holdings, Inc. (MDC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Beazer Homes USA surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 87.10%.
KB Home has an impressive year-over-year earnings growth estimate of 64.9%.
M.D.C. Holdings has an impressive long-term earnings growth estimate of 9.90%.
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