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Can Johnson Controls (JCI) Maintain its Earnings Beat Streak in Q3?

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Johnson Controls International plc (JCI - Free Report) is slated to release third-quarter fiscal 2021 results on Jul 30, before the opening bell. The Zacks Consensus Estimate for the company’s quarterly earnings is pegged at 83 cents per share on revenues of $6.24 billion.

The company delivered better-than-anticipated earnings in the last reported quarter on higher-than-expected contribution from the Global Products and Building Solutions North America segments.

The company topped earnings estimates in each of the preceding four quarters, the average beat being 12.9%. This is depicted in the graph below:

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for Johnson Controls’ fiscal third-quarter earnings per share (EPS) moved north by a penny to 83 cents over the past 30 days. Moreover, this compares favorably with the year-ago quarter’s reported earnings of 67 cents. Also, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 16.8%.

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 +0.75%. 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 sustained recovery of the economy 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 mirror the favorable impact of surging sales on the HVAC and Building Management Solutions (BMS) platforms across all segments of the company.

The Zacks Consensus Estimate for sales from Building Solutions North America for the period in discussion is pegged at $2,239 million, suggesting a rise from the $2,020 million reported in the prior-year quarter. Further, the consensus mark for the segment’s EBIT is pinned at $320 million, calling for an improvement from the $300 million seen in the last-year quarter.

The consensus mark for quarterly sales from Building Solutions Asia Pacific is pegged at $678 million, calling for a rise from the $588 million reported in the prior-year period. The same for the EBIT from the segment is $96 million, indicating growth from the year-ago period’s $92 million.

The consensus mark for quarterly sales from Building Solutions EMEA/LA is pegged at $930 million, calling for a surge from the $756 million witnessed in the prior-year quarter. The same for the EBIT from the segment is $76 million, indicating an improvement from the $62 million reported in the year-earlier period.

The consensus mark for quarterly sales from Global Products is pegged at $2,517 million, indicating an increase from the $1,979 million recorded in the prior-year quarter. The same for the EBIT from the segment is $552 million, suggesting a jump from the $385 million seen in the year-ago period.

The launch of OpenBlue Buildings as a service during the quarter is likely to have boosted the firm’s top line, while meeting energy efficiency and sustainability goals. Partnerships with Pelion and DigiCert, entered upon during the quarter to be reported, would aid Johnson Controls’ in providing smart buildings solutions. In addition, during the quarter in discussion, Johnson Controls completed the acquisition of Silent-Aire, thereby establishing itself as a leader in the high growth hyperscale data-center vertical, with industry-dominant cooling equipment and modular data-center technologies.

Other Stocks to Consider

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

Eaton Corporation (ETN - Free Report) has an Earnings ESP of +2.17% and currently carries a Zacks Rank of 2. The company is slated to release earnings figures on Aug 3.

Manitex International (MNTX - Free Report) has an Earnings ESP of +100% and carries a Zacks Rank #3, at present. The company will announce second-quarter 2021 results on Aug 3.

ParkerHannifin Corporation (PH - Free Report) has an Earnings ESP of +1.33% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Aug 5.