Johnson Controls (JCI) Up 7.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Johnson Controls (JCI). Shares have added about 7.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Johnson Controls due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Johnson Controls Q4 Earnings Miss, Revenues Rise Y/Y
Johnson Controls reported fourth-quarter fiscal 2023 (ended Sep 30, 2023) adjusted earnings of $1.05 per share, which missed the Zacks Consensus Estimate of earnings of $1.09 per share. However, the bottom line increased 6.1% year over year.
Total revenues of $7,092 million missed the consensus estimate of $6,906 million. The top line increased 2.7% year over year.
Segmental Results
Building Solutions North America: The segment’s revenues were $2,778 million, up 8.4% year over year. Organic sales jumped 8%, owing to growth in the Service and Install businesses due to strong performances in HVAC & Controls and Fire & Security. The segment’s EBITA increased 13% year over year to $427 million.
Building Solutions Europe, Middle East, Africa/Latin America: Revenues from this segment totaled $1,045 million, up 7.1% year over year. Organic sales climbed 3% due to growth in Service and HVAC & Controls and Fire & Security businesses. The segment’s EBITA was $82 million, down 11% from the year-ago period.
Building Solutions Asia Pacific: Revenues decreased 7.2% to $697 million in the reported quarter. Sales declined 6% organically because the Install business has been negatively impacted by weakness in China. The segment’s EBITA was $94 million, down 11% year over year.
Global Products: Revenues in this segment declined 2% year over year to $2,386 million. Organic sales were down 2% due to a decline in global Residential sales. The segment’s EBITA was $502 million, down 6% year over year.
Financial Position
Johnson Controls had cash and cash equivalents of $835 million as of Sep 30, 2023, compared with $2,031 million at the end of fiscal 2022. Long-term debt was $7,818 million compared with $7,426 million at the end of fiscal 2022.
The company reported a free cash flow of $1,819 million in fiscal 2023 compared with $1,398 million in the year-ago period.
The company repurchased 10.5 million shares for approximately $625 million in fiscal 2023.
Fiscal Q1 Guidance
For the first quarter of fiscal 2024, Johnson Controls anticipates organic revenue growth to be flat year over year. The segment EBITA margin is estimated to be approximately 13%. The company expects adjusted earnings to be 48-50 cents per share in the fiscal first quarter.
FY24 Guidance
Johnson Controls anticipates year-over-year organic revenue growth to be in the mid-single digits in fiscal 2024. The adjusted segment EBITA margin is expected to improve 25 bps year over year.
JCI expects adjusted earnings to be approximately $3.65-$3.80 per share in fiscal 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Johnson Controls has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Johnson Controls has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Johnson Controls International plc (JCI) : Free Stock Analysis Report
