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Factors Shaping the Fate of Johnson Controls' (JCI) Q2 Earnings

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Johnson Controls International plc JCI is slated to release second-quarter fiscal 2021 results on Apr 30, before the opening bell. The Zacks Consensus Estimate for the company’s quarterly earnings is pegged at 49 cents per share on revenues of $5.6 billion.

The company delivered better-than-anticipated earnings in the last reported quarter on higher-than-estimated EBIT in the Building Solutions Europe, Middle East, Africa/Latin America and Building Solutions Asia Pacific segments.

The company surpassed earnings estimates in each of the trailing four quarters, the average beat being 14.04%. This is depicted in the graph below:

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for Johnson Controls’ fiscal second-quarter earnings per share (EPS) moved north by a penny to 49 cents over the past 30 days. Moreover, this compares favorably with the year-ago quarter’s reported earnings of 42 cents. Also, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 2.84%.

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 +3.32%. This is because the Most Accurate Estimate is pegged one cent 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 at Play

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 the favorable impact of surging sales on the HVAC and Building Management Solutions (BMS) platforms in North America, and Asia Pacific regions.

The Zacks Consensus Estimate for sales from Building Solutions North America for the period in discussion is pegged at $2,114 million, calling for a rise from the prior quarter’s $2,034 million. Further, the consensus mark for the segment’s EBIT is pinned at $263 million, suggesting an improvement from the $255 million reported in the last quarter.

Also, the consensus mark for quarterly sales from Building Solutions Asia Pacific is pegged at $621 million, calling for a rise from the $615 million reported in the previous quarter.

Further, the launch of the company’s latest digital platform — OpenBlue — during the fiscal third quarter of 2020 is anticipated to have been conducive to Johnson Controls’ top line. Digital integration of OpenBlue with Johnson Controls' core building systems is likely to have optimized the performance of the full HVAC system, making the shared spaces safer and more sustainable. Additionally, 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

Along with Johnson Controls, here are a few other stocks lined up to release quarterly results soon. Encouragingly, our model predicts earnings beats for these stocks as well:

The Goodyear Tire & Rubber Company GT has an Earnings ESP of +67.74% and carries a Zacks Rank #3 at present. The company will announce first-quarter 2021 results on Apr 30.

IAA Inc. (IAA - Free Report) has an Earnings ESP of +5.6% and currently carries a Zacks Rank of 2. The company is slated to release earnings figures on May 4.

General Motors (GM - Free Report) has an Earnings ESP of +3.77% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on May 5.

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