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What's in the Offing for Johnson Controls' (JCI) Q3 Earnings?

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Johnson Controls (JCI - Free Report) is scheduled to release third-quarter fiscal 2023 (ended Jun 30, 2023) financial numbers on Aug 2, before market open.

JCI has a stellar earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 1.4%.

Let’s see how things have shaped up for Johnson Controls’ fiscal third-quarter earnings.

Factors to Note

A robust demand environment, pricing actions and cost-control initiatives are expected to have aided Johnson Controls’ fiscal third-quarter performance. The company expects adjusted segment EBITA margin improvement of 120-130 basis points year over year for the fiscal third quarter.

The Building Solutions North America segment is expected to reflect higher revenues on the back of continued improvement in HVAC & Controls and growth in the Install business. We expect the segment’s revenues to increase 10.2% from the year-ago reported figure.

The Building Solutions Europe, the Middle East, Africa/Latin America segment is expected to have benefited from growth in the Service and Install businesses. Our estimate for the segment’s revenues suggests a 12% increase from the year-ago reported figure.

Continued demand for HVAC & Controls is expected to have boosted the Building Solutions Asia Pacific segment revenues in the fiscal third quarter. We expect the segment’s revenues to increase 11% from third-quarter fiscal 2022 reported figure.

For the fiscal third quarter, Johnson Controls anticipates organic revenue growth of approximately 10%. The company expects adjusted earnings per share of $1.01-$1.03 , indicating a year-over-year increase of 19-21%.

Supply chain disruptions and slowdown in residential demand are likely to have weighed on the Global Products segment in the to-be-reported quarter. We expect the segment’s revenues to inch up merely 0.5% from the year-ago reported figure.

Given Johnson Controls’ substantial international presence, adverse movements in foreign currencies are likely to have dented the company’s top line in the to-be-reported quarter.

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, which is the case here, as elaborated below.

Earnings ESP: Johnson Controls has an Earnings ESP of +0.24%. 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 #3.

Highlights of Q2 Earnings

Johnson Controls reported second-quarter fiscal 2023 (ended Mar 31, 2022) adjusted earnings of 75 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents. The bottom line increased 19% year over year. Total revenues of $6,686 million surpassed the Zacks Consensus Estimate of $6,471.3 million. The top line increased 9.6% year over year.

Other Stocks to Consider

Here are some other companies within the broader Industrial Products sector that you may want to consider, as according to our model, these have the right combination of elements to beat on earnings this reporting cycle.

Emerson Electric Co. (EMR - Free Report) has an Earnings ESP of +2.35% and a Zacks Rank #2. The company is scheduled to release third-quarter fiscal 2023 (ended Jun 30, 2023) results on Aug 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Emerson pulled off a trailing four-quarter earnings surprise of 4.5%, on average. The stock has gained 11.8% in the past three months.

Ingersoll Rand (IR - Free Report) has an Earnings ESP of +0.85% and a Zacks Rank #3. The company is slated to release second-quarter 2023 earnings numbers on Aug 2.

Ingersoll Rand delivered a trailing four-quarter earnings surprise of 12.6%, on average. The stock has rallied 14.2% in the past three months.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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