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Johnson Controls (JCI) to Post Q4 Earnings: What's in Store?

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Zacks Equity Research
·4 min read
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Johnson Controls International plc JCI is slated to release fourth-quarter fiscal 2020 results on Nov 3, before the opening bell. The Zacks Consensus Estimate for the company’s quarterly earnings is pegged at 73 cents per share on revenues of $5,694 million.

The company delivered better-than-expected results in the last reported quarter on robust revenues in the Building Solutions North America and Building Solutions Europe, Middle East, Africa/Latin America segments.

The company surpassed earnings estimates in each of the trailing four quarters, the average beat being 13.11%. This is depicted in the graph below:

Johnson Controls International plc Price and EPS Surprise

Johnson Controls International plc Price and EPS Surprise
Johnson Controls International plc Price and EPS Surprise

Johnson Controls International plc price-eps-surprise | Johnson Controls International plc Quote

Investors project an earnings beat for Johnson Controls this time around. Reassuringly, our model also indicates the same.

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for Johnson Controls’ fiscal fourth-quarter earnings per share (EPS) moved north by a penny to 73 cents over the past 30 days. However, this compares unfavorably with the year-ago quarter’s reported earnings of 78 cents. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year decline of 9.24%.

Earnings Whispers

Our proven model predicts an earnings beat for Johnson Controls this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This has been elaborated below.

Earnings ESP: Johnson Controls has an Earnings ESP of +2.69%. This is because the Most Accurate Estimate is pegged two cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Johnson Controls currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Setting the Tone

With the economy gradually recovering from the repercussions of the pandemic, the HVAC equipment market, along with the Fire & Security businesses, is witnessing exponential growth.  Johnson Controls’ quarterly results will likely reflect favorable impact of the gained momentum on its HVAC and Building Management Solutions (BMS) platforms in North America, and the Europe, Middle East, Africa/Latin America regions.

The Zacks Consensus Estimate for sales from Building Solutions North America for the period in discussion is pegged at $2,185 million, up from the prior quarter’s $2,020 million. Also, the consensus mark for Building Solutions Europe, Middle East, Africa/Latin America for the to-be-reported quarter is pinned at $835 million, up from the $756 million reported in the last quarter.
    
Further, the launch of OpenBlue, the company’s latest digital platform, in the fiscal third quarter is anticipated to have been conducive to Johnson Controls’ top line during the fourth quarter. Digital integration of OpenBlue with Johnson Controls' core building systems is expected to have optimized the performance of the full HVAC system, making the shared spaces safer and more sustainable during the period under consideration.

Further, the company’s cost-containment efforts in response to the coronavirus pandemic are likely to have buoyed its earnings during the to-be-reported quarter.

Other Stocks to Consider

Here are a few other stocks worth considering, as these too have the right combination of elements to come up with an earnings beat this time around:

General Motor Company GM has an Earnings ESP of +1.25% and carries a Zacks Rank #3, at present. It is scheduled to report earnings results on Nov 5.

BRP Inc DOOO has an Earnings ESP of +18.52% and carries a Zacks Rank of 3 currently. The company is set to announce quarterly figures on Nov 25.

Magna International MGA has an Earnings ESP of +1.92% and currently holds a Zacks Rank #3. The company is slated to release quarterly numbers on Nov 6.

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Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
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