Is There More Upside For Johnson Controls Stock?

+26.30%
Upside
50.67
Market
64.00
Trefis
JCI: Johnson Controls logo
JCI
Johnson Controls

Johnson Controls stock (NYSE: JCI) is up 6% in a month, while it’s down 29% this year, underperforming the broader indices, with the S&P500 index down 16%. Last month, we pointed out that despite a robust outlook and backlog for Johnson Controls, its stock may see lower levels based on its historical performance. The stock corrected from levels of $59 on Aug 18 to $54 on Aug 31 before rising to $57 now.

While Johnson Controls has a record backlog of $11.1 billion currently, the supply chain disruptions are weighing on its sales growth, a trend expected to continue in the near term. Despite the near-term headwinds, we believe that JCI stock has some more room for growth. We estimate Johnson Control’s Valuation to be around $64 per share, reflecting an 11% upside from its current levels of $57. At its current levels, JCI stock is trading at 19x its expected forward earnings, compared to the last three-year average of 21x, implying that JCI stock has some more room for growth.

But what about the near term?

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  5. Should You Buy Johnson Controls Stock At $70?
  6. What To Expect From Johnson Controls Stock Following Its Q1 FY2022 Results?

Now that JCI stock has seen a rise of 6% in a month, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a higher chance of a rise for JCI stock over the next month. A move of 6% or more in a month for JCI is common and has occurred 470 times in the past ten years. Of those, 292 instances resulted in JCI stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 292 of 470 or a 62% chance of a rise in JCI stock over the next month. See our analysis of Johnson Controls Stock Chance of Rise for more details.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using the last ten years’ data

  • After moving 6.1% or more over five days, the stock rose on 55% of the occasions in the next five days.
  • After moving 3.6% or more over ten days, the stock rose in the next ten days on 53% of the occasions
  • After moving 6.2% or more over a twenty-one-day period, the stock rose on 62% of the occasions in the next twenty-one days.

This pattern suggests a higher chance of a rise in JCI stock over the next five days, ten days, and the next month.

Johnson Controls (JCI) Return (Recent) Comparison With Peers

  • Five-Day Return: LII highest at 7.4%; HON lowest at -0.2%
  • Ten-Day Return: JCI highest at 3.6%; HON lowest at -5.0%
  • Twenty-One Day Return: JCI highest at 6.2%; EMR lowest at -3.4%

While JCI stock looks like it has more room for growth, it is helpful to see how Johnson Controls’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised by how counter-intuitive the stock valuation is for AZZ vs. Beacon Roofing Supply.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Sep 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 JCI Return 6% -29% 39%
 S&P 500 Return 1% -16% 79%
 Trefis Multi-Strategy Portfolio 2% -14% 241%

[1] Month-to-date and year-to-date as of 9/9/2022
[2] Cumulative total returns since the end of 2016

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