What’s Next For Johnson Controls Stock After An 8% Fall Yesterday?

Johnson Controls stock (NYSE: JCI) dropped 8% in yesterday’s trading session after an in-line Q3 performance and lower guidance. However, we believe that the selling in JCI is overdone, and investors will likely be better off buying this dip for solid gains in the long run. Johnson Controls’ revenues were up 8% to $7.1 billion in fiscal Q3’23 (fiscal ends in September), compared to our forecast of $7.2 billion. This growth was driven by a 10% rise in North America and EMEA/LA sales, an 11% rise in Asia Pacific, and a 5% growth in Global Products segment sales. This can be attributed to better price realization and strong demand trends for its commercial HVAC and fire and safety products.

The company’s adjusted EBIT margins improved by 160 bps to 13.8%. Its GAAP operating margin rose 380 bps to 12.2% in Q3’23, aided by better price realization. The earnings of $1.03 on a per share and adjusted basis were up 21% from $0.85 in the prior-year quarter, and this compares with our estimate of $1.03. The rise in earnings can be attributed to higher sales and improved operating margins.