Will Johnson Controls Miss Estimates Again?

by Trefis Team
+2.80%
Upside
64.44
Market
66.24
Trefis
JCI
Johnson Controls
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Key Trends In The Quarter:

1) Possible Growth Slowdown In The Building Efficiency Segment

  • In Q1, net sales grew at a high rate of 18% over the previous year.
  • Fewer secured federal jobs, and weakness in China and the Middle East may hamper earnings.
  • 30 basis points improvement in margins expected for the year.

2) Contraction In Margins In The Power Solutions Segment

  • In Q1, Power Solutions segment boasted a 260 basis points margin improvement.
  • This was due to a favorable currency impact and a 16% fall in lead prices over Q1 2015.
  • In comparison to this strong improvement in the previous quarter, a margin contraction may occur.

3) Effects Of M&A Activity

  • JCI is expecting market share gain in Asia as a consequence of its partnership with Hitachi.
  • Spin-off of its automotive seating and interiors business into Adient is expected to be completed in October.
  • Merger with Tyco, to close before end of its fiscal year, will result in $500M in operational synergies and $150M in tax synergies.

 

Have more questions on Johnson Controls? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Johnson Controls.

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