Is Johnson Controls Stock Fairly Valued?

-0.16%
Downside
65.10
Market
64.99
Trefis
JCI: Johnson Controls logo
JCI
Johnson Controls

Our Trefis valuation methodology suggests that Johnson Controls (NYSE: JCI) stock is worth $36 which is in line with the current stock price.  Our price estimate is based on a P/E multiple of 12.4, slightly lower than what the stock has traded at in the last one year. Johnson Controls has maintained a steady revenue and earnings growth post 2017 when revenue went up by more than 60%. In Q1 of 2019 the company posted revenue of $5.46 billion while the earnings were $0.39, both above the consensus estimates.

For Fiscal year 2019 we expect Johnson Controls to maintain its steady growth and report around $24.3 billion in revenues while also increasing EBITDA margins and decreasing indirect expenses. We have summarized our expectations on our interactive dashboard platform, What is the Fundamental Value for Johnson Controls?  If you disagree with our forecasts, you can change the key drivers to gauge how changes will impact the valuation. In addition, here is more Industrials data.

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Global Products segment and Building Solutions North America are expected to continue contributing the highest to Total revenue, approximately 73%,  by posting around $8.7 billion and about $9.1 billion in revenues respectively. This has been aided by the growth in the North American non-residential construction markets. The company is also ramping up new product introductions in Fiscal year 2019 with the aim to elevate its market share, which in turn will increase the top line.  The portfolio is being built around solutions which help the customers build, design, retrofit, and manage the next generation of safe, smart, and connected buildings.

The company’s ongoing restructuring plan is expected to significantly reduce annual operating costs from continuing operations, primarily the result of lower cost of sales and selling, general, and administrative expenses. Such measures will result in an improvement in the margins.

 

Note: In Total Revenue numbers we have excluded Power Solutions department revenue from previous years for easy comparison purpose.

 

 

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