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Johnson Controls (JCI)
NYSE:JCI
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Johnson Controls
(NYSE:JCI)
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Rating:69Neutral
Price Target:
$142.00
▼(-1.59% Downside)
Action:DowngradedDate:02/05/26
The score is driven primarily by solid financial performance (strong profitability and improved margins, though tempered by uneven revenue trends and inconsistent cash flow) and a very constructive earnings update with raised guidance and strong order/backlog momentum. Technicals support the longer-term uptrend but are currently overbought, while valuation and a low dividend yield modestly cap the upside from a scoring perspective.
Positive Factors
Record Orders & Backlog
A record $18B backlog from ~40% order growth provides durable multi-quarter revenue visibility and supports longer-term planning. Large, multi-year projects and service contracts create recurring revenue streams and justify investments in capacity and field operations, improving predictability.
Product Innovation & Data Center Momentum
Targeted product launches and partnerships for high-density data centers strengthen JCI's competitive moat in a structurally growing market. Higher capacity density, large water savings and 10x sensor insights differentiate offerings, supporting durable pricing power and win rates in an expanding secular end market.
Improving Profitability & Margin Expansion
Sustained margin expansion and significant EPS improvement reflect operational leverage from better factory execution and pricing. Higher margins increase free cash flow potential and ROE durability, enabling reinvestment in product development and service capabilities over the medium term.
Negative Factors
Longer-Dated Order Conversion
A large portion of new orders are long-dated, creating a timing mismatch between demand signals and revenue recognition. This delays cash conversion and can compress near-term organic sales despite backlog growth, complicating forecasting and working-capital management over the next several quarters.
Choppy Cash Generation
Low OCF relative to sales and volatile annual FCF reduce financial flexibility for capex, M&A or cushioning through downturns. Even with management targeting strong FCF conversion, timing sensitivity in receivables and working capital raises the risk that cash will lag accrual earnings across cycles.
Capacity & Execution Scaling Risks
Rapidly rising, complex orders strain factory throughput, engineering and field delivery. Execution shortfalls could delay shipments, increase warranty or reserve exposures, and pressure margins. Scaling operational processes and skilled labor sustainably is required to convert backlog without eroding profitability.
Johnson Controls (JCI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$88.32B
Dividend Yield1.27%
Average Volume (3M)4.89M
Price to Earnings (P/E)27.1
Beta (1Y)1.12
Revenue Growth-10.19%
EPS Growth100.65%
CountryUS
Employees94,000
SectorIndustrials
Sector Strength72
IndustryConstruction
Share Statistics
EPS (TTM)0.89
Shares Outstanding612,066,200
10 Day Avg. Volume4,447,376
30 Day Avg. Volume4,886,715
Financial Highlights & Ratios
PEG Ratio5.01
Price to Book (P/B)5.54
Price to Sales (P/S)3.04
P/FCF Ratio74.26
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue4.08
Enterprise Value/Gross Profit11.19
Enterprise Value/Ebitda29.19
Forecast
1Y Price Target
$139.64Price Target Upside-3.23% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering11
EPS Forecast (FY)4.72
Revenue Forecast (FY)$25.12B
Johnson Controls Business Overview & Revenue Model
Company DescriptionJohnson Controls International plc, together with its subsidiaries, engages in engineering, manufacturing, commissioning, and retrofitting building products and systems in the United States, Europe, the Asia Pacific, and internationally. It operates in four segments: Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific, and Global Products. The company designs, sells, installs, and services heating, ventilating, air conditioning, controls, building management, refrigeration, integrated electronic security, integrated fire detection and suppression systems, and fire protection and security products for commercial, industrial, retail, small business, institutional, and governmental customers; and provides energy efficiency solutions and technical services, including inspection, scheduled maintenance, and repair and replacement of mechanical and control systems, as well as data-driven smart building solutions to non-residential building and industrial applications. It also offers controls software and software services for residential and commercial applications. Johnson Controls International plc was founded in 1885 and is headquartered in Cork, Ireland.
How the Company Makes MoneyJohnson Controls generates revenue through several key streams. The Building Solutions segment is a significant contributor, as it provides HVAC systems, building automation, security, and fire protection services to commercial, industrial, and residential markets. The Power Solutions segment, which focuses on advanced battery systems for vehicles, also plays a crucial role in the company's earnings. JCI benefits from long-term service contracts and maintenance agreements, ensuring recurring revenue. Additionally, strategic partnerships with technology firms and collaborations with construction companies bolster its market position and expand its reach. The company also emphasizes innovation in energy efficiency and sustainability, aligning with global trends towards greener technologies, which contributes to increased demand and revenue growth.
Johnson Controls Key Performance Indicators (KPIs)
Any
EBITDA by Segment
Shows earnings before interest, taxes, depreciation, and amortization for each business segment, highlighting which areas are most profitable and where operational efficiencies or challenges exist.
Shows earnings before interest, taxes, depreciation, and amortization for each business segment, highlighting which areas are most profitable and where operational efficiencies or challenges exist.
Data provided by:
The Fly
The FlyJohnson Controls Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 01, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational momentum and financial progress: record order intake (~+40%), revenue growth (+6%), significant margin expansion (+190 bps to 12.4%), EPS growth (~+40% quarterly) and a raised full-year EPS guide (~+25%). Management highlighted product innovation and data center strength, a growing backlog ($18B) and improving factory and field execution under a new business system. Key cautions were that many large orders are longer-dated (limiting immediate revenue conversion), China is stabilizing but not rebounding to prior growth levels, a small periodic $15M reserve headwind impacted North America margins, SG&A remains elevated versus peers, and accelerating orders create execution and capacity scaling risks. On balance, the positive operational and financial developments materially outweigh the listed challenges.Q1-2026 Updates
Positive Updates
Record Order Growth and Backlog
Orders increased nearly 40% year-over-year; record backlog grew 20% to $18 billion, providing strong revenue visibility across the business.
Revenue Growth
Organic revenue grew 6% year-over-year with broad-based contribution across segments and regions.
Margin Expansion and Profitability
Adjusted EBIT margin expanded 190 basis points to 12.4%; segment margins rose 70 basis points to 15.7%. Adjusted EPS for the quarter was $0.89, up nearly 40% year-over-year and above guidance.
Raised Full-Year Guidance and Strong EPS Outlook
Full-year adjusted EPS guidance raised to approximately $4.70 (roughly 25% growth). Q2 adjusted EPS guide ~ $1.11 and organic sales growth guidance ~5%.
Data Center Momentum and Product Innovation
Notable product launches targeted at high-density data centers: YDAM chiller (up to 3.5 MW, ~20% higher capacity density), YKHT (widest operating range, potential to eliminate up to 9 million gallons of cooling tower water annually), and Smart Ready Chiller (10x insights vs a standard remote-connected chiller). Strong collaboration with NVIDIA and customers on reference designs.
Regional Strength and Service Growth
Orders by region: Americas +56%, EMEA +8%, APAC +10%. Service revenue grew 9% year-over-year (double-digit service growth in Americas, high single-digit in EMEA, steady in APAC).
Operational Execution Gains
Early benefits from proprietary business system: factory on-time delivery sustained at 95–100% in a key chiller facility; sales time-with-customer metrics materially improved (example cited moving from prior 60% improvement to 100% improvement); over 1,000 colleagues engaged, 80+ kaizens completed, 350 senior leaders trained.
Strong Balance Sheet and Cash Conversion
Available cash ~ $600 million, net debt declined to 2.2x, total liquidity strong, and company continues to expect approximately 100% free cash flow conversion for the year.
Negative Updates
Near-Term Revenue Conversion Timing
Many of the larger orders (particularly data center and life sciences projects) are not necessarily shippable within the next 9–12 months, which limits near-term organic revenue translation despite a 20% backlog increase.
China Market Stabilization
Management reports stabilization in China but expects it is unlikely to return to prior high growth rates, reducing a previously larger growth tailwind in the region.
Localized Margin Headwinds
North America margins were slightly lighter in the quarter, including a roughly $15 million headwind from periodic product liability/reserve adjustments.
SG&A and Investment Mix
SG&A remains high versus peers and management plans to both reduce certain administrative costs and increase R&D spend; higher R&D investment could pressure near-term profitability if top-line improvement slows.
Potential Capacity and Execution Risks
While management stated they have not yet hit capacity constraints, accelerating large order activity increases pressure on factory throughput, project engineering and delivery; further scaling may require continued operational improvements.
Backlog vs. Organic Growth Mismatch
Despite record backlog (+20%), full-year organic sales guidance remains mid-single-digits, highlighting a timing/mix disconnect between orders received and revenue recognition this fiscal year.
Company Guidance
Management raised full‑year guidance after a strong Q1 start and now expects adjusted EPS of approximately $4.70 (≈25% growth), mid‑single‑digit organic sales growth, operating leverage of ~50% and roughly 100% free‑cash‑flow conversion; for fiscal Q2 they guide organic sales growth of ~5%, operating leverage of ~45% and adjusted EPS of about $1.11. These targets follow Q1 results of orders up nearly 40%, backlog up 20% to $18 billion, organic revenue +6%, adjusted EBIT margin +190 bps to 12.4%, adjusted EPS $0.89 (≈40% YoY), available cash ≈$600 million and net debt at 2.2x.Johnson Controls Financial Statement Overview
Summary
Profitability is strong with a meaningful TTM earnings rebound and improved operating margin, and leverage appears serviceable with strong ROE. Offsetting this, revenue trends have been uneven over multiple years and cash generation is a key watch item (low operating cash flow relative to sales and choppy annual free cash flow), which reduces financial flexibility.Income Statement
TTM (Trailing-Twelve-Months) profitability is strong, with healthy gross and net margins and improved operating margin versus prior years. Revenue growth in TTM is high, but the longer-term top-line trend has been modest with a notable dip in 2023, suggesting growth can be uneven. Net income has stepped up materially versus 2024, supporting the higher score, though margins have shown some volatility over the multi-year period.78
Positive
Balance Sheet
Leverage is manageable with debt below equity in both TTM (Trailing-Twelve-Months) and the latest annual period, and returns on equity are strong. However, debt-to-equity has moved around over time (higher in the most recent annual period), and equity is down versus 2024, which reduces balance-sheet cushion. Overall, the capital structure looks serviceable, but not especially conservative for a cyclical/end-market-exposed business.67
Positive
Cash Flow
Free cash flow conversion is decent in TTM (Trailing-Twelve-Months) (free cash flow is a meaningful share of net income) and free cash flow growth is strong versus the prior period. The key weakness is cash generation relative to revenue: operating cash flow as a share of revenue is low across periods, and annual free cash flow has been choppy (including declines in 2024 and 2025 annual), pointing to working-capital or timing sensitivity.62
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 23.97B | 23.60B | 22.95B | 22.33B | 20.64B | 23.67B |
| Gross Profit | 8.74B | 8.59B | 8.08B | 7.82B | 7.09B | 8.05B |
| EBITDA | 3.35B | 3.15B | 2.80B | 2.10B | 2.05B | 3.88B |
| Net Income | 3.40B | 3.29B | 1.71B | 1.85B | 1.53B | 1.64B |
Balance Sheet | ||||||
| Total Assets | 37.98B | 37.94B | 42.70B | 42.24B | 42.16B | 41.89B |
| Cash, Cash Equivalents and Short-Term Investments | 552.00M | 379.00M | 606.00M | 828.00M | 2.03B | 1.34B |
| Total Debt | 9.14B | 11.19B | 9.49B | 8.82B | 8.96B | 7.74B |
| Total Liabilities | 24.75B | 24.98B | 25.33B | 24.55B | 24.76B | 23.14B |
| Stockholders Equity | 13.20B | 12.93B | 16.10B | 16.55B | 16.27B | 17.56B |
Cash Flow | ||||||
| Free Cash Flow | 1.30B | 965.00M | 1.60B | 1.77B | 1.50B | 1.94B |
| Operating Cash Flow | 1.70B | 1.40B | 2.10B | 2.22B | 1.99B | 2.49B |
| Investing Cash Flow | 6.34B | 6.13B | -221.00M | -1.18B | -693.00M | -1.09B |
| Financing Cash Flow | -8.05B | -7.39B | -2.08B | -2.17B | -516.00M | -2.13B |
Johnson Controls Technical Analysis
Positive
144.30
Price Trends
125.02
Positive
119.34
Positive
111.83
Positive
Market Momentum
6.25
Positive
72.22
Negative
70.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JCI, the sentiment is Positive. The current price of 144.3 is above the 20-day moving average (MA) of 137.52, above the 50-day MA of 125.02, and above the 200-day MA of 111.83, indicating a bullish trend. The MACD of 6.25 indicates Positive momentum. The RSI at 72.22 is Negative, neither overbought nor oversold. The STOCH value of 70.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JCI.
Johnson Controls Risk Analysis
Johnson Controls disclosed 37 risk factors in its most recent earnings report. Johnson Controls reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Johnson Controls Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $102.33B | 35.63 | 36.86% | 0.95% | 8.58% | 20.37% | |
77 Outperform | $16.14B | 23.01 | 35.05% | 1.28% | 0.14% | 3.88% | |
69 Neutral | $88.32B | 27.15 | 13.15% | 1.27% | -10.19% | 100.65% | |
69 Neutral | $53.83B | 36.88 | 10.44% | 1.65% | -7.93% | -35.00% | |
67 Neutral | $19.84B | 25.04 | 78.10% | 0.96% | 3.77% | 12.46% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
52 Neutral | $11.54B | 26.78 | 10.06% | ― | -6.44% | -48.84% |
* Industrials Sector Average
JCI
Johnson Controls
144.30
62.98
77.45%
BLDR
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CSL
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TT
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462.32
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34.81%
LII
Lennox International
569.94
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CARR
Carrier Global
64.40
2.04
3.27%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.