Johnson Controls International PLC (JCI, Financial) experienced a daily gain of 2.3% and a 3-month loss of -0.11%, with Earnings Per Share (EPS) of 2.99. The question arises: Is the stock modestly undervalued? This article presents an in-depth valuation analysis of Johnson Controls International PLC. We invite you to read on for a comprehensive understanding of the company's intrinsic value.
A Snapshot of Johnson Controls International PLC
Johnson Controls International PLC manufactures, installs, and services HVAC systems, building management systems and controls, industrial refrigeration systems, and fire and security solutions. It generated over $25 billion in revenue in fiscal 2022. The company's stock price currently stands at $60.49, while its GF Value, an estimation of fair value, is $69.48. This comparison sets the stage for a deeper look into the company's value.
Understanding the GF Value
The GF Value represents the current intrinsic value of a stock, derived from our exclusive method. It takes into account historical trading multiples, a GuruFocus adjustment factor based on the company's past performance and growth, and estimates of future business performance. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded.
According to our calculations, Johnson Controls International PLC's stock is modestly undervalued. At its current price of $60.49 per share and a market cap of $41.20 billion, we believe the stock should be trading at a higher value. Consequently, the long-term return of its stock is likely to be higher than its business growth.
Financial Strength of Johnson Controls International PLC
Investing in companies with poor financial strength carries a higher risk of permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy its stock. Johnson Controls International PLC has a cash-to-debt ratio of 0.11, which is worse than 86.66% of companies in the Construction industry. Despite this, we rank the overall financial strength of Johnson Controls International PLC at 6 out of 10, indicating fair financial strength.
Profitability and Growth of Johnson Controls International PLC
Investing in profitable companies, particularly those with consistent long-term profitability, is generally less risky. Johnson Controls International PLC has been profitable 9 out of the past 10 years. With a revenue of $26.60 billion and Earnings Per Share (EPS) of $2.99 over the past twelve months, its operating margin is 10.6%, ranking better than 77.84% of companies in the Construction industry.
Growth is a critical factor in a company's valuation. Johnson Controls International PLC's 3-year average annual revenue growth is 9.7%, ranking better than 70.36% of companies in the Construction industry. Its 3-year average EBITDA growth rate is 16%, ranking better than 70.81% of companies in the same industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) is another way to assess its profitability. Johnson Controls International PLC's ROIC is 9.33, and its WACC is 8.8 for the past 12 months.
Conclusion
In conclusion, Johnson Controls International PLC's stock is believed to be modestly undervalued. The company's financial condition is fair, and its profitability is also fair. Its growth ranks better than 70.81% of companies in the Construction industry. To learn more about Johnson Controls International PLC stock, you can check out its 30-Year Financials here.
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