It has been about a month since the last earnings report for Johnson Controls (JCI). Shares have added about 9.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Johnson Controls due for a pullback? 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 Q4 Earnings Beat Estimates, Down Y/Y
Johnson Controls reported adjusted earnings per share of 76 cents for fourth-quarter fiscal 2020, which outpaced the Zacks Consensus Estimate of 73 cents. This outperformance was mainly aided by higher-than-expected EBITA from the company’s Building Solutions North America segment. The bottom line, however, was lower than the prior-year quarter’s 78 cents per share.
Johnson Controls reported revenues of $5,954 million, down 5.4% year over year, for the fiscal fourth quarter. The revenue figure, however, beat the Zacks Consensus Estimate of $5,694 million. Gross profit decreased to $1,975 million from the year-earlier quarter’s $1,980 million.
Selling, general and administrative expenses for the fiscal fourth quarter totaled $1,453 million, lower than the prior-year quarter’s $1,960 million.
Segmental Results
Building Solutions North America: This segment’s adjusted revenues came in at $2,243 million, down from the year-ago quarter’s $ 2,401 million on decline in HVAC & Controls and Fire & Security. The segment’s EBITA decreased to $341 million from $346 million reported in fourth-quarter fiscal 2019. However, the metric surpassed the Zacks Consensus Estimate of $329 million.
Building Solutions Europe, Middle East, Africa/Latin America: Revenues in this segment came in at $906 million, down 4.3% year over year due to fall in project installations, and volume declines across all regions and platforms. The segment’s EBITA was $101 million, down from the fourth-quarter fiscal 2019 level of $110 million. Significant volume declines during the quarter resulted in this downtrend.
Building Solutions Asia Pacific: Revenues decreased to $661 million from the year-ago quarter’s $726 million on declines in project installations and services. This segment’s EBITA came in at $90 million, down from the fourth-quarter fiscal 2019 level of $101 million on lower volume.
Global Products: Revenues in this segment declined to $2,144 million from the prior year’s $2,199 million, mainly due to lower sales within Building Management Systems, HVAC & Refrigeration Equipment, and Specialty Products. This segment’s EBITA was $377 million, down from the fourth-quarter fiscal 2019 level of $405 million due to dismal volume.
Financial Position
Johnson Controls had cash and cash equivalents of $1,951 million as of Sep 30, 2020, down from $2,805 million on Sep 30, 2019. Long-term debt increased to $7,526 million for the reported quarter from $6,708 million as of Sep 30, 2019.
Q1 Guidance
The company projects organic revenues to be down 5-7% year over year in first-quarter fiscal 2021. It also expects adjusted EPS in the range of 39-41 cents for first-quarter 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Johnson Controls has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Johnson Controls has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
