What To Expect From Johnson Controls Stock Q1 FY2021 Results?

Johnson Controls (NYSE:JCI) is scheduled to report its Q1 fiscal 2021 results on Friday, January 29. We expect Johnson Controls to likely post revenue and earnings slightly above the consensus estimates, driven by a rebound in demand for building solutions, and new product launches. We expect the company to navigate well based on these trends over the latest quarter.

However, our forecast indicates that Johnson Control’s valuation is around $44 per share, which is 12% below the current market price of around $50. Our interactive dashboard analysis on Johnson Controls’ Pre-Earnings has additional details.

(1) Revenues expected to be slightly above the consensus estimates

Trefis estimates Johnson Control’s Q1 2021 revenues to be around $5.30 billion, modestly ahead of the $5.27 billion consensus estimate. While the project timelines and cash flows for real estate developers were affected due to the halt in certain construction activities in 2020, impacting Johnson Control’s business, the gradual opening up of economies and resumption of construction activities is likely to have aided sales in Q1. That said, overall commercial construction activity still remains below the pre-Covid levels. Johnson Controls’ Q4 2020 sales were down 5.1% to $5.9 billion, with sales down across geographies. Our dashboard on Johnson Controls Revenues offers more details on the company’s segments.

2) EPS also likely to be slightly above the consensus estimates

Johnson Controls Q1 2021 adjusted earnings per share (EPS) is expected to be $0.42 per Trefis analysis, compared to $0.40 as per the consensus estimate. Johnson Controls’ adjusted net income of $563 million in Q4 2020 reflected a 8% decline from its $615 million figure in the prior-year quarter. The margins will likely improve going forward, as the building solutions business sees a rebound. For the full-fiscal 2021, we expect the adjusted EPS to be higher at $2.58 compared to $2.24 in 2020.

(3) Stock price estimate lower than the current market price

Going by our Johnson Controls Valuation, with an EPS estimate of around $2.58 and a P/E multiple of around 17x in fiscal 2021, this translates into a price of $44, which is 12% below the current market price of around $50. Although the 17x figure is lower than levels of around 20x seen over the recent years, the multiple can see a contraction given that the demand for building solutions may remain tepid in the near term. While the demand will increase sequentially, it is likely to remain lower compared to pre-Covid levels, especially with a delay in returning to offices.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

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