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Johnson Controls (JCI) to Post Q1 Earnings: What's in Store?

Zacks Equity Research

Johnson Controls International plc JCI is slated to release first-quarter fiscal 2020 results on Jan 31, before the opening bell.

The company posted better-than-expected results in the last reported quarter, mainly aided by higher revenues in the Building Solutions North America and Building Solutions Asia Pacific segments.

The company surpassed earnings estimates in each of the trailing four quarters, the average beat being 5.20%. This is depicted in the graph below:

Johnson Controls International plc Price and Consensus

Johnson Controls International plc Price and Consensus
Johnson Controls International plc Price and Consensus

Johnson Controls International plc price-consensus-chart | Johnson Controls International plc Quote

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Which Way are the Estimates Headed?

The Zacks Consensus Estimate for the fiscal first-quarter earnings per share (EPS) remained unrevised at 38 cents over the past 30 days. This suggests an improvement over the year-ago quarter’s reported earnings of 26 cents. The Zacks Consensus Estimate for revenues is pegged at $5.55 billion, suggesting a rise from the prior-year quarter reported figure of $5.46 billion.

Factors Setting the Tone

Johnson Controls is likely to have benefited from strong growth in HVAC equipment, along with Fire & Security businesses, in the fiscal first quarter. While the quarterly results will likely reflect the favorable impact of continued strength in its HVAC and Building Management Solutions (BMS) platforms in North America, economic headwinds in Europe and China might have offset these positives.

Johnson Controls’ buyout of Smartvue and merger with Tyco International are anticipated to have boosted the company’s growth prospects during the period under consideration. Also, the company’s partnership with Foxconn is expected to have helped in the advancement of smart buildings and smart-city technologies through artificial intelligence and machine learning.

Further, cost-containment efforts and strong backlog position are likely to have buoyed earnings in the to-be-reported quarter.

However, as Johnson Controls has significant exposure in Europe and China, sluggish economic growth in these regions is likely to have affected its earnings during the quarter under review. The U.S.-Sino trade tiff also might have unusually impacted commodity prices (including steel and aluminum) and eroded the company’s margins in the quarter to be reported.

Moreover, the fiscal first-quarter results will likely reflect the negative impact of the power solutions business’ divestment, which has increased its cyclic exposure.

What the Zacks Model Says

Our proven model does not conclusively predict 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Johnson Controls has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 38 cents.

Zacks Rank: Johnson Controls currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are some companies, which according to our model, have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Cummins Inc. CMI has an Earnings ESP of +0.76% and carries a Zacks Rank #3, currently. The company is slated to release fourth-quarter 2019 earnings on Feb 4.

Gentherm Inc. THRM is set to report quarterly numbers on Feb 19. The stock has an Earnings ESP of +15.70% and sports a Zacks Rank #1, at present.

Agnico Eagle Mines Limited AEM is set to release earnings results on Feb 13. The company has an Earnings ESP of +6.54% and currently holds a Zacks Rank of 3.

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Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
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