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Factors Shaping the Fate of Johnson Controls' (JCI) Q1 Earnings

Zacks Equity Research
·5-min read

Johnson Controls International plc JCI is slated to release first-quarter fiscal 2022 results on Feb 2, before the opening bell. The Zacks Consensus Estimate for the company’s quarterly earnings is pegged at 53 cents per share on revenues of $5.8 billion.

The company’s last quarter earnings surpassed the Zacks Consensus Estimate on the higher-than-expected contributions from the Building Solutions Asia Pacific and Global Products segments.

The company topped earnings estimates in the preceding four quarters, the average beat being 3.7%. This is depicted in the graph below:

Johnson Controls International plc Price and EPS Surprise

Johnson Controls International plc Price and EPS Surprise
Johnson Controls International plc Price and EPS Surprise

Johnson Controls International plc price-eps-surprise | Johnson Controls International plc Quote

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for Johnson Controls’ fiscal first-quarter earnings per share (EPS) moved 7 cents south to 53 cents over the past 90 days. Nonetheless, this suggests an improvement from the year-ago quarter’s reported earnings of 43 cents. Also, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 8.5%.

Earnings Whispers

Our proven Zacks 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. However, that is not the case here as elaborated below.

Earnings ESP: Johnson Controls has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is on par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Johnson Controls currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

With the sustained recovery of the economy, the global HVAC (heating, ventilation, and air conditioning) market along with the security and safety business is witnessing exponential growth. Also, amid the rising trends of decarbonization, Johnson Controls expects a surge in demand for its healthy and smart buildings. Thus, the company’s quarterly results will likely reflect the favorable impact of soaring sales on the HVAC and Building Management Solutions (BMS) platforms.

Markedly, the Zacks Consensus Estimate for sales from the Building Solutions North America segment for the period in discussion is pegged at $2,145 million, suggesting a rise from the $2,034 million reported in the prior-year quarter. Further, the consensus mark for the segment’s EBIT is pinned at $275 million, calling for an improvement from the $255 million seen in the last-year quarter.

The consensus mark for quarterly sales from the Building Solutions EMEA/LA segment is pegged at $918 million, calling for a surge from the $906 million witnessed in the prior-year quarter. The same for the EBIT from the segment is $92 million, indicating an improvement from the $79 million reported in the year-earlier period.

The consensus mark for quarterly sales from the Global Products segment is pegged at $2,102 million, indicating an increase from the $1,786 million recorded in the prior-year quarter. The same for the segment’s EBIT is $270 million, suggesting a jump from the $213 million seen in the year-ago period.

However, the consensus mark for quarterly EBIT from the Building Solutions Asia Pacific unit is pegged at $79 million, suggesting a fall from the $95 million reported in the prior-year period.

During the to-be-reported quarter, Johnson Controls introduced an all-in-one solution– OpenBlue Performance Advisor application – that enables building operators to track sustainability, health and wellness metrics while also reducing energy use, water use, waste, and carbon footprint. During the quarter under discussion, the company also rolled out its OpenBlue digital platform technologies across Derwent London's portfolio, enabling new possibilities for operational efficiency, occupant experiences and sustainability in one dynamic solution. This series of events aimed at enhancing Johnson Controls’ product offerings is likely beneficial for the company’s performance during the December-end quarter.

However, the global chip crunch and supply-chain issues like component shortage and labor constraints are expected to have dented Johnson Controls’ fiscal first-quarter margins. Further, inflation in commodity prices and high capital expenditure incurred for introducing new technologies will likely hurt Johnson Controls’ quarterly performance.

Stocks With Favorable Combination

Here are a few other stocks in the Industrial Products sector lined up to release quarterly results soon. Encouragingly, our model predicts earnings beats for these stocks:

Terex TEX has an Earnings ESP of +1.36% and a Zacks Rank #3. The stock is set to report fourth-quarter 2021 earnings on Feb 11.

The Zacks Consensus Estimate for Terex’s to-be-reported quarter’s earnings and revenues is pegged at 55 cents per share and $948.5 million, respectively. TEX’s fourth-quarter earnings estimate has been revised upward by 3 cents in the last 90 days.

Tenaris TS has an Earnings ESP of +25.7% and a Zacks Rank #2. The stock is set to report fourth-quarter 2021 earnings on Feb 16.

The Zacks Consensus Estimate for Tenaris’ to-be-reported quarter’s earnings and revenues is pegged at 46 cents per share and $2.03 billion, respectively. Encouragingly, TS surpassed earnings estimates in the last four quarters, with an average of 492.4%.

Sealed Air SEE has an Earnings ESP of +1.75% and a Zacks Rank #2. The stock is set to report fourth-quarter 2021 earnings on Feb 17.

The Zacks Consensus Estimate for Sealed Air’s to-be-reported quarter’s earnings and revenues is pegged at $1.14 per share and $1.49 billion, respectively. SEE surpassed earnings estimates in three of the last four quarters, while missed in one, the average surprise being 6.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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

Terex Corporation (TEX) : Free Stock Analysis Report

Sealed Air Corporation (SEE) : Free Stock Analysis Report

Tenaris S.A. (TS) : Free Stock Analysis Report

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