To the Moon? What is going on with JCI?

One of the standouts of today's afternoon trading session was Johnson Controls International, which logged a 1.4% performance and outperformed the S&P 500 by 1.0%. The Farm & Heavy Construction Machinery stock is now trading at $56.27 per share and may still have upside potential because it is still -18.78% under its average target price of $69.28. Analysts have set target prices ranging from $58.0 to $78.0 dollars per share, and have given the stock an average rating of buy.

The market seems to share this rosy outlook, since Johnson Controls International has a short interest of only 1.4%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.

When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.

Another way to gauge the sentiment on Johnson Controls International is to look at the percentage of institutions that are invested in the stock. In this case, 93.5% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.

If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.

Overall, there is mixed market sentiment on Johnson Controls International because its an analyst consensus of some upside potential, a buy rating, a very low short interest, and a significant number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.

Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are JCI's recent cash flows:

Date Reported Cash Flow from Operations ($ k) Capital expenditures ($ k) Free Cash Flow ($ k) YoY Growth (%)
2023 2,010,000 528,000 1,482,000 6.01
2022 1,990,000 592,000 1,398,000 -30.07
2021 2,551,000 552,000 1,999,000 -1.82
2020 2,479,000 443,000 2,036,000 75.97
2019 1,743,000 586,000 1,157,000 -38.06
2018 2,513,000 645,000 1,868,000
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.