Johnson Controls International plc: Very strong results, revision story intact

Research evidence excerpt

Johnson Controls International plc: Very strong results, revision story intact

Forecast returns

Forecast price appreciation 28.3%

Forecast dividend yield 1.2%

Forecast stock return 29.6%

Market return assumption 9.3%

Forecast excess return 20.3%

Company Description

Johnson Controls is a globally diversified company providing equipment, installation and

services primarily for commercial and residential buildings. JCI manufactures and services

HVAC systems, fire & security systems, and building management systems and controls. In

2016, Johnson Controls merged with Tyco, while also divesting JCI's former automotive

experience division (seating and other interior components). In 2019, JCI completed the

divestiture of its former Power Solutions (automotive lead acid batteries) business.

Valuation Method and Risk Statement

Our price target for JCI is based on relative NTM P/E multiple.

Risk Statement: The Electrical Equipment and Multi Industry sector faces a broad range of

risks. It is cyclical in nature with exposure to the underlying cycles inherent in everything from

aviation, auto, trucking and trains to construction and consumer electronics to mining,

power, oil and gas and more depending on the specific stock. EEMI companies are subject to

risks associated with unexpected changes in the underlying global macro environment,

currency and interest rate movements, commodity price inflation as well as company-specific

execution, M&A, integration, labor relations and changes in the competitive or regulatory

environment. These changes can be in the form of product technology, e-commerce and

other digital disruption and/or channel disintermediation. Capacity and related pricing

pressures are also a risk through the cycle. Finally, these multinational companies are subject