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Is Johnson Controls (JCI) a Great Value Stock Right Now?

Zacks Equity Research
MarineMax (HZO) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Johnson Controls (JCI). JCI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 16.65 right now. For comparison, its industry sports an average P/E of 16.93. Over the past 52 weeks, JCI's Forward P/E has been as high as 17.91 and as low as 9.32, with a median of 12.46.

Another valuation metric that we should highlight is JCI's P/B ratio of 1.67. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.92. Over the past 12 months, JCI's P/B has been as high as 1.70 and as low as 1.17, with a median of 1.51.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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 1.3. This compares to its industry's average P/S of 1.56.

These are only a few of the key metrics included in Johnson Controls's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, JCI looks like an impressive value stock at the moment.


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