Johnson Controls (JCI) Down 5.2% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Johnson Controls International plc JCI. Shares have lost about 5.2% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is JCI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Johnson Controls Q2 Earnings & Revenues Beat Estimates

Johnson Controls reported adjusted earnings of 53 cents per share in second-quarter fiscal 2018, beating the Zacks Consensus Estimate of 52 cents. Moreover, earnings increased 6% from 50 cents per share registered in second-quarter fiscal 2017.

Operational Update

Johnson Controls reported revenues of $7.48 billion, surpassing the Zacks Consensus Estimate of $7.45 billion. Revenues increased 3% year over year.

Cost of sales increased to $5.26 billion from $4.99 billion in the year-ago quarter. Gross profit decreased to $2.22 billion from $2.28 billion in the year-ago quarter.

Selling, general and administrative expenses in the fiscal second quarter totaled $1.59 billion, decreasing from the prior-year quarter figure of $1.73 billion.

Segment Results

Building Technologies & Solutions: This segment’s adjusted revenues were $5.63 billion, increasing from the year-ago quarter figure of $5.54 billion.

Segment EBITA increased to $630 million from $628 million in second-quarter fiscal 2017.

Power Solutions: Adjusted revenues in this segment increased to $1.86 billion from $1.70 billion in second-quarter fiscal 2017. Segment EBITA was $314 million, up from second-quarter fiscal 2017 figure of $303 million.

Financial Position

Johnson Controls had cash and cash equivalents of $268 million as of Mar 31, 2018, increasing from $321 million as of Sep 30, 2017. Long-term debt declined to $11 billion in the quarter from $12 billion as of Sep 30, 2017.

In the reported quarter, the company repurchased 1.3 million shares for $50 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.

Johnson Controls International plc Price and Consensus

Johnson Controls International plc Price and Consensus | Johnson Controls International plc Quote

VGM Scores

At this time, JCI has an average Growth Score of C, however its Momentum is doing a bit better with a B. Following the exact same course, 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.

Based on our scores, the stock is more suitable for value and momentum investors than growth investors.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions has been net zero. Notably, JCI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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