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What's in the Cards for Johnson Controls' (JCI) Q4 Earnings?

Zacks Equity Research

Johnson Controls International plc JCI is slated to release fourth-quarter fiscal 2019 results on Nov 7, before the opening bell.

The company came up with better-than-expected results in the last reported quarter on the back of higher revenues from the Building Solutions North American segment. As far as earnings surprises are concerned, it displays an excellent record of surpassing estimates in each of the trailing four quarters, with the average being 4.54%.

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

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Investors are expecting Johnson Controls — whose peers include Brady Corporation BRC, Allegion PLC ALLE and Lakeland Industries, Inc. LAKE — to top earnings estimates this season as well. However, our model does not indicate an earnings beat for the company for the to-be-reported quarter.

Top and Bottom-Line Estimates

The Zacks Consensus Estimate for third-quarter earnings per share has remained stable at 76 cents in the past three months. The estimated figure indicates a 18.3% decline from the year-ago reported earnings of 93 cents per share. The Zacks Consensus Estimate for revenues is pegged at $6,419 million, suggesting fall of 23.3% from the prior-year reported figure.

Factors at Play

Johnson Controls is likely to have benefited from strong growth in HVAC equipment, along with Fire & Security businesses in the quarter to be reported. While continued strength in its HVAC and Building Management Solutions (BMS) platforms in North America is likely to reflect on fiscal fourth-quarter results, economic headwinds in Europe and China might have offset the positives.

As Johnson Controls has significant exposure Europe and China, weak economic growth in these regions is likely to have affected earnings in the to-be-reported quarter. U.S.-Sino trade war tensions are likely to have affected commodity prices (including steel and aluminum) and hurt the firm’s margins in the quarter to be reported.

Moreover, divestment of the power solutions business has increased its cyclic exposure and is likely to have negatively reflected on fiscal fourth-quarter results.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Johnson Controls in the quarter to be reported. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%.

Zacks Rank: Johnson Controls currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
Brady Corporation (BRC) : Free Stock Analysis Report
 
Allegion PLC (ALLE) : Free Stock Analysis Report
 
Lakeland Industries, Inc. (LAKE) : Free Stock Analysis Report
 
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Zacks Investment Research