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Why Is Johnson Controls (JCI) Down 1.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Johnson Controls (JCI - Free Report) . Shares have lost about 1.4% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Johnson Controls Q1 Earnings Beat, Revenues Miss
Johnson Controls reported first-quarter fiscal 2023 (ended Dec 31, 2022) adjusted earnings of 67 cents per share, which surpassed the Zacks Consensus Estimate of 66 cents. The bottom line increased 24.1% year over year. Our estimate for earnings in the fiscal first quarter was 65 cents.
Total revenues of $6,068 million missed the Zacks Consensus Estimate of $6,263.8 million. The top line increased 3.5% year over year. Our estimate for total revenues in the fiscal first quarter was $6,176.8 million.
Segmental Results
Building Solutions North America: The segment’s revenues came in at $2,367 million, up 10% year over year. Our estimate for Building Solutions North America revenues stood at $2,285.5 million. Organic sales also jumped 10%, owing to growth in the Install business. The segment’s EBITA increased 7% year over year to $267 million.
Building Solutions Europe, Middle East, Africa/Latin America: Revenues from this segment totaled $975 million, up 2% year over year. Our estimate for Building Solutions Europe, Middle East, Africa/Latin America revenues for the fiscal fourth quarter was $941.6 million. Organic sales climbed 12% due to mid-teens growth in a service-based business and low double-digit growth in Fire & Security. The segment’s EBITA came in at $75 million, down 28% from the year-ago period. Performance was hurt by dilutive price/cost and unfavorable mix.
Building Solutions Asia Pacific: Revenues decreased 4% to $646 million in the reported quarter. Our estimate for Building Solutions Asia-Pacific revenues was $663.3 million. Sales climbed 7% organically due to continued demand for HVAC & Controls. The segment’s adjusted EBITA came in at $68 million, flat year over year.
Global Products: Revenues in this segment were flat year over year at $2,080 million. Our estimate for Global Products revenues in the fiscal fourth quarter was $2,286.4 million. Organic sales rose 7% on the back of strong price realization and continued growth in Commercial HVAC and Fire Detection products. The segment’s adjusted EBITA came in at $382 million, up 27% year over year, aided by pricing actions.
Financial Position
Johnson Controls had cash and cash equivalents of $1,509 million as of Dec 31, 2022, compared with $2,031 million at the end of fiscal 2022. Long-term debt was $7,784 million compared with $7,426 million at the end of fiscal 2022. Free cash flow was negative $430 million during the first quarter of fiscal 2023 compared with positive $257 million in the year-ago period. The company repurchased and retired $154 million worth of shares in the fiscal first quarter.
Q2 Guidance
Johnson Controls anticipates organic revenue growth of approximately 10% year over year in the fiscal second quarter. Adjusted segment EBITDA margin is expected to improve 100 to 110 basis points year over year. The company expects adjusted earnings of 72-74 cents per share, indicating a 15-18% rise year over year.
Fiscal 2023 Guidance
Johnson Controls anticipates organic revenue growth between high single digits and low double digits year over year. Adjusted segment EBITDA margin is expected to improve 90-120 basis points, year over year, in fiscal 2023. JCI predicts adjusted earnings of $3.30-$3.60 for fiscal 2023, reflecting an increase of 10-20% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Johnson Controls has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 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.
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Why Is Johnson Controls (JCI) Down 1.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Johnson Controls (JCI - Free Report) . Shares have lost about 1.4% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Johnson Controls Q1 Earnings Beat, Revenues Miss
Johnson Controls reported first-quarter fiscal 2023 (ended Dec 31, 2022) adjusted earnings of 67 cents per share, which surpassed the Zacks Consensus Estimate of 66 cents. The bottom line increased 24.1% year over year. Our estimate for earnings in the fiscal first quarter was 65 cents.
Total revenues of $6,068 million missed the Zacks Consensus Estimate of $6,263.8 million. The top line increased 3.5% year over year. Our estimate for total revenues in the fiscal first quarter was $6,176.8 million.
Segmental Results
Building Solutions North America: The segment’s revenues came in at $2,367 million, up 10% year over year. Our estimate for Building Solutions North America revenues stood at $2,285.5 million. Organic sales also jumped 10%, owing to growth in the Install business. The segment’s EBITA increased 7% year over year to $267 million.
Building Solutions Europe, Middle East, Africa/Latin America: Revenues from this segment totaled $975 million, up 2% year over year. Our estimate for Building Solutions Europe, Middle East, Africa/Latin America revenues for the fiscal fourth quarter was $941.6 million. Organic sales climbed 12% due to mid-teens growth in a service-based business and low double-digit growth in Fire & Security. The segment’s EBITA came in at $75 million, down 28% from the year-ago period. Performance was hurt by dilutive price/cost and unfavorable mix.
Building Solutions Asia Pacific: Revenues decreased 4% to $646 million in the reported quarter. Our estimate for Building Solutions Asia-Pacific revenues was $663.3 million. Sales climbed 7% organically due to continued demand for HVAC & Controls. The segment’s adjusted EBITA came in at $68 million, flat year over year.
Global Products: Revenues in this segment were flat year over year at $2,080 million. Our estimate for Global Products revenues in the fiscal fourth quarter was $2,286.4 million. Organic sales rose 7% on the back of strong price realization and continued growth in Commercial HVAC and Fire Detection products. The segment’s adjusted EBITA came in at $382 million, up 27% year over year, aided by pricing actions.
Financial Position
Johnson Controls had cash and cash equivalents of $1,509 million as of Dec 31, 2022, compared with $2,031 million at the end of fiscal 2022. Long-term debt was $7,784 million compared with $7,426 million at the end of fiscal 2022. Free cash flow was negative $430 million during the first quarter of fiscal 2023 compared with positive $257 million in the year-ago period. The company repurchased and retired $154 million worth of shares in the fiscal first quarter.
Q2 Guidance
Johnson Controls anticipates organic revenue growth of approximately 10% year over year in the fiscal second quarter. Adjusted segment EBITDA margin is expected to improve 100 to 110 basis points year over year. The company expects adjusted earnings of 72-74 cents per share, indicating a 15-18% rise year over year.
Fiscal 2023 Guidance
Johnson Controls anticipates organic revenue growth between high single digits and low double digits year over year. Adjusted segment EBITDA margin is expected to improve 90-120 basis points, year over year, in fiscal 2023. JCI predicts adjusted earnings of $3.30-$3.60 for fiscal 2023, reflecting an increase of 10-20% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Johnson Controls has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 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.