Don't Judge Johnson Controls International on Technicals Alone - Check Its Fundamentals!

Now trading at a price of $67.87, Johnson Controls International has moved 1.7% so far today on a volume of 1,102,018, compared to its average of 3,744,309. In contrast, the S&P 500 index moved -0.3%. Read below for a basic value analysis of Johnson Controls International.

Johnson Controls International shares moved -8.6% over the last 52 weeks, with a high of $75.2 and a low of $45.52. During this time, the stock basically tracked the performance of the S&P 500. As of January 2022, the company's 50-day average price is $66.0.

Johnson Controls International plc, together with its subsidiaries, engages in engineering, manufacturing, commissioning, and retrofitting building products and systems in the United States, Europe, the Asia Pacific, and internationally. The large-cap Industrials company has 102,000 full time employees and is based in Cork, Ireland. Johnson Controls International has returned a 2.1% dividend yield over the last 12 months.

Exceptional EPS Growth with Reasonable Leverage Levels:

2019-09-30 2020-09-30 2021-09-30 2022-09-30
Revenue (MM) $23,968 $22,317 $23,668 $25,299
Revenue Growth n/a -6.89% 6.05% 6.89%
Gross Margins 32.1% 33.2% 34.0% 33.0%
Gross Margins Growth n/a 3.43% 2.41% -2.94%
Operating Margins 6.0% 7.8% 11.8% 9.5%
Operating Margins Growth n/a 30.0% 51.28% -19.49%
Earnings Per Share $6.49 $0.84 $2.27 $2.19
EPS Growth n/a -87.06% 170.24% -3.52%
Free Cash Flow (MM) $616 $1,776 $1,935 $1,394
FCF Growth n/a 188.31% 8.95% -27.96%
Capital Expenditures (MM) -$586 -$443 -$552 -$592
Net Debt / EBITDA 1.77 2.14 1.65 2.01

Johnson Controls International Is Currently Fairly Valued:

Compared to the Industrials sector's average of 21.46, Johnson Controls International has a trailing twelve month P/E ratio of 31.0 and, according to its EPS guidance of 4.03, an expected P/E ratio of 16.8. Johnson Controls International's PEG ratio is 0.76 based on its 40.75% annual average growth rate of historical and projected earnings per share.

However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Johnson Controls International's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 2.37, which suggests that the company's shares are actually overvalued.

On the other hand, Johnson Controls International is likely undervalued in terms of its equity because its P/B ratio is 2.9 compared to its sector average of 3.7. The company's shares are currently trading 71.4% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 2.95 * 23.621) = $39.6

Despite Johnson Controls International's elevated earnings multiple, the company's impressive cash flow trend and reasonable leverage indicate demonstrate the company may be fairly valued.

Johnson Controls International Is the Subject of Mixed Market Indicators:

19 analysts are following Johnson Controls International and have set target prices ranging from $58 to $81 per share. On average, they have given the company a rating of buy. At the current price of $67.87, JCI is trading -5.95% away from its average analyst target price of $72.16 per share, implying an analyst consensus of some upside potential for the stock.

The company has a very low short interest since 1.1% of the company's shares are tied to short positions. Institutions own 92.0% of Johnson Controls International's shares, while the insider ownership rate stands at 0.26%. The biggest shareholder is Wellington Management Group, LLP with a 10% stake in the company worth approximately $4,442,361,259.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.