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At US$41.31, Is It Time To Put Johnson Controls International plc (NYSE:JCI) On Your Watch List?

Simply Wall St
·3 mins read

Today we're going to take a look at the well-established Johnson Controls International plc (NYSE:JCI). The company's stock saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Johnson Controls International’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Johnson Controls International

Is Johnson Controls International still cheap?

According to my valuation model, the stock is currently overvalued by about 33%, trading at US$41.31 compared to my intrinsic value of $31.00. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Johnson Controls International’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Johnson Controls International?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. In the upcoming year, Johnson Controls International’s earnings are expected to increase by 75%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in JCI’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe JCI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on JCI for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for JCI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Johnson Controls International, you'd also look into what risks it is currently facing. To that end, you should learn about the 4 warning signs we've spotted with Johnson Controls International (including 1 which is significant).

If you are no longer interested in Johnson Controls International, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.