Why Acuity Stock Sank Today
Key Points
Acuity reported second-quarter earnings today and met analysts' expectations.
Its sales grew by 20% and its adjusted earnings per share rose by 18%.
Most importantly, Acuity's nascent intelligent spaces business continued to boom.
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Leading lighting and intelligent spaces creator Acuity (NYSE: AYI) is down 13% as of noon ET on Thursday following second-quarter earnings. While the stock is down today, Acuity met Wall Street's expectations on both the top and bottom lines, growing sales and adjusted earnings per share by 20% and 18%, respectively. However, after the stock rose 30% between April 2024 and early January this year, the stock was priced for perfection -- so when management didn't boost guidance, the market reacted negatively.
Acuity: Lighting and the Internet of Things
Acuity generates roughly 80% of its sales from its lighting business and the rest from its burgeoning intelligent spaces unit. The latter focuses on an array of Internet of Things (IoT) use cases, such as its:
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- Atrius data platform that provides spatial intelligence, asset tracking, and the continuous monitoring of numerous variables (HVAC, energy consumption, lighting, etc.)
- Distech Controls segment comprises of its business management system that helps Atrius make smarter and more sustainable
- QSC business that blends creativity and technology to create the best audio-visual experiences possible
Image source: Getty Images.
This QSC business line has stolen the show recently, after being acquired by Acuity in 2024 for $1.2 billion. It immediately became the core of Acuity's growth ambitions, increasing its sales 40% compared to last year. QSC combines audio, visual, and control options into a cloud-based solution, creating a centralized control center for corporate meeting rooms, universities, airports, cinemas, theme parks, sports venues, and live events.
As Acuity laps the acquisition date of when it picked up QSC, it will be important for investors to see how well this unit continues to grow. Now trading at just 19 times free cash flow, Acuity is worth a long look if this nascent growth segment continues to boom.
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Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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