Johnson Controls Exceeds Q4 Expectations


Aided by increasing orders and backlog, Johnson Controls International PLC. (JCI) reported solid fourth-quarter and FY21 results. Shares of the building HVAC, fire and safety equipment manufacturer jumped 1.1% on November 5, closing at $74.63.

Solid Q4 and FY21 Results

The company reported Q4 adjusted earnings of $0.88 per share, up 16% year-over-year and significantly higher than analyst estimates of $0.76 per share.

Further, quarterly revenue rose 7% year-over-year to $6.39 billion, outpacing Street estimates of $5.53 billion. Notably, the company’s orders increased 9% year-over-year, with robust demand across all of its segments, while the period-end backlog grew 10% organically compared to the same period last year.

Additionally, for the full fiscal year, JCI posted adjusted earnings of $2.65 per share, increasing 18% compared to FY20, while annual revenue rose 6% to $23.67 billion compared to the prior year.

Management’s Comments

Commenting on the results, Chairman and CEO of JCI, George Oliver, said, “Although supply chain disruptions and inflation headwinds are expected to continue near term, I am excited and encouraged by the pace of demand in many of our end markets and our record backlogs, both of which position us well for fiscal 2022.”

Oliver added, “Looking ahead, we are intensifying our focus on accelerating our growth capabilities, leveraging innovative technologies, driving higher attachment of recurring services, and capitalizing on our vectors of growth.”

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Guidance

Based on the current economic environment and continued business momentum, JCI expects adjusted earnings for Q1FY22 to fall in the range of $0.52 to $0.54 per share, against the consensus estimate of $0.53 per share.

Additionally, adjusted earnings for FY22 are expected to be between $3.22 and $3.32 per share, against the consensus estimate of $2.83 per share.

Wall Street’s View

In response to JCI’s performance, Cowen & Co. analyst Gautam Khanna reiterated a Buy rating on the stock with a price target of $78, which implies upside potential of 4.5% to current levels.

Overall, the stock has a Moderate Buy consensus rating based on 7 Buys and 3 Holds. At the time of writing, the average Johnson Controls price target was $82.70, which implies 10.8% upside potential to current levels. Shares have gained 68% over the past year.

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