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Johnson Controls International plc Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?

Simply Wall St

The full-year results for Johnson Controls International plc (NYSE:JCI) were released last week, making it a good time to revisit its performance. It looks like the results were a bit of a negative overall. While revenues of US$24b were in line with analyst predictions, earnings were less than expected, missing estimates by 3.4% to hit US$1.26 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Johnson Controls International after the latest results.

See our latest analysis for Johnson Controls International

NYSE:JCI Past and Future Earnings, November 24th 2019

Taking into account the latest results, the most recent consensus for Johnson Controls International from 15 analysts is for revenues of US$24.6b in 2020, which is a reasonable 2.6% increase on its sales over the past 12 months. Earnings per share are expected to leap 93% to US$2.44. Yet prior to the latest earnings, analysts had been forecasting revenues of US$24.6b and earnings per share (EPS) of US$2.40 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$45.19. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Johnson Controls International at US$50.00 per share, while the most bearish prices it at US$37.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.

Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. One thing stands out from these estimates, which is that analysts are forecasting Johnson Controls International to grow faster in the future than it has in the past, with revenues expected to grow 2.6%. If achieved, this would be a much better result than the 5.3% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 4.2% next year. So although Johnson Controls International's revenue growth is expected to improve, it is still expected to grow slower than the market.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Johnson Controls International's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Johnson Controls International analysts - going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Johnson Controls International's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.