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Are Investors Undervaluing Johnson Controls (JCI) Right Now?

Zacks Equity Research
Adobe Systems (ADBE) closed at $306.87 in the latest trading session, marking a -1.04% move from the prior day.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Johnson Controls (JCI) is a stock many investors are watching right now. JCI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

We should also highlight that JCI has a P/B ratio of 1.64. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. JCI's current P/B looks attractive when compared to its industry's average P/B of 1.84. Over the past year, JCI's P/B has been as high as 1.70 and as low as 1.17, with a median of 1.50.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. JCI has a P/S ratio of 1.28. This compares to its industry's average P/S of 1.55.

These are just a handful of the figures considered in Johnson Controls's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that JCI is an impressive value stock right now.


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