Johnson Controls (JCI) Down 6.2% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Johnson Controls (JCI). Shares have lost about 6.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Johnson Controls due for a breakout? 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 catalysts.

Johnson Controls Tops Q1 Earnings Mark

Johnson Controls reported adjusted first-quarter fiscal 2022 earnings per share of 54 cents, up nearly 26% year over year. The bottom line marginally topped the Zacks Consensus Estimate of 53 cents. This outperformance stemmed from higher-than-expected revenues from Building Solutions North America, Building Solutions Europe, Middle East, Africa/Latin America and Building Solutions Asia Pacific and segments.

The company reported adjusted revenues of $5,862 million, up 9.7% year over year. The top line also outpaced the Zacks Consensus Estimate of $5,767.3 million.

Segmental Results

Building Solutions North America: This segment’s adjusted revenues came in at $2,152 million, up 6% from the year-ago quarter’s $2,034 million on growth in HVAC & Controls and Service. The metric marginally topped the Zacks Consensus Estimate of $2,145 million. The segment’s EBITA decreased to $250 million from $255 million reported in first-quarter fiscal 2021 and lagged the consensus mark of $275 million.

Building Solutions Europe, Middle East, Africa/Latin America: Revenues from this segment totaled $959 million, up 1.2% year over year with modest growth in both project installations and service activity, led by strength in Fire & Security, and beat the consensus mark of $914 million. The segment’s EBITA came in at $104 million, up 6.1% year over year. The metric also topped the consensus mark of $92 million.

Building Solutions Asia Pacific: Revenues grew to $675 million, up 11.8% year over year on higher project installations and services, driven by strong growth in Applied HVAC & Controls. The metric topped the consensus mark of $634 million. The segment’s EBITA came in at $68 million, up nearly 12%, driven by volume leverage and the benefit of SG&A/COGS actions which were more than offset by negative price/cost and the unfavorable impact of install/service and geographic mix. The metric, however, lagged the consensus mark of $79 million.

Global Products: Revenues in this segment climbed to $2,076 million, increasing 18.3% year over year, mainly on higher sales in commercial and residential HVAC and Fire & Security. The figure lagged the consensus mark of $2,102 million. The segment’s EBITA came in at $301 million, up around 42% year over year, aided by operational efficiency, favorable product mix and higher sales. The metric beat the Zacks Consensus Estimate of $270 million.

Financial Position

Johnson Controls had cash and cash equivalents of $1,207 million as of Dec 31, 2021, down from $1,839 from the previous-year quarter. Long-term debt marginally decreased to $7,437 million as of Dec 31, 2021. Free cash flow in first-quarter fiscal 2022 was $0.3 billion. During the reported quarter, Johnson Controls completed more than $500 million in share repurchases. It also raised the dividend by 26% and deployed more than $100 million in cash in acquisitions.

Guidance

For second-quarter fiscal 2022, Johnson Controls expects adjusted EPS in the range of 62-64 cents per share, an increase of 19-23% year over year. For fiscal 2022, adjusted EPS expectation is in the band of $3.22-$3.32, implying a 22-25% jump on a year-over-year basis.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Johnson Controls has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. 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. Notably, Johnson Controls has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.