Johnson Controls Benefits From Business Strength Amid Headwinds

Johnson Controls International plc JCI has been witnessing strong momentum in the Building Solutions North America segment, driven by strength in heating, ventilation and air conditioning and controls businesses. The segment’s revenues jumped 16% year over year in the fourth quarter of fiscal 2024 (ended September 2024). Strength in control, security and industrial refrigeration businesses is supporting the Building Solutions EMEA/LA segment. Revenues from this segment increased 7% year over year in the fiscal fourth quarter.Driven by strength across its business, the company has issued bullish guidance for fiscal 2025 (ending September 2024). For the fiscal year, it estimates organic revenue growth to be in the mid-single digits year over year.The company remains focused on acquiring businesses to gain access to new customers, regions and product lines. The acquisition of digital workplace management and Internet of Things solutions provider, FM:Systems, in July 2023, expanded OpenBlue’s digital buildings offerings, adding cloud-based software as a service digital workplace management capabilities. In fiscal 2024, acquisitions increased the company’s revenues by $137 million.JCI’s measures to reward its shareholders are encouraging. In fiscal 2024, Johnson Controls paid a dividend worth $1 billion (up 2% year over year) to its shareholders. The company also repurchased shares worth $1.2 billion (up 99%) in the same period. Also, in fiscal 2023 (ended September 2023), Johnson Controls returned $1.61 billion to shareholders through a combination of dividends ($980 million) and share repurchases ($625 million).JCI’s Price PerformanceImage Source: Zacks Investment ResearchShares of the Zacks Rank #3 (Hold) company have gained 2.8% against the industry’s 3.4% decline over the past three months.Despite the positives, JCI has been grappling with weakness in its Building Solutions Asia Pacific segment. The segment’s revenues fell 5% in the fourth quarter of fiscal 2024. The company expects the soft demand environment in China to impact the performance of the Building Solutions Asia Pacific segment in the near term.The escalating selling, general and administrative (SG&A) expenses pose a threat to Johnson Controls’ bottom line. In fiscal 2024, the company witnessed a 5.1% year-over-year increase in SG&A expenses to $5.7 billion. It has been incurring higher corporate costs related to additional IT investments and cybersecurity enhancement costs.Also, its weak liquidity position raises concerns. Exiting the fiscal fourth quarter, JCI had cash and cash equivalents of $606 million, less than the short-term debt and current portion of long-term debt of $1.5 billion.Key PicksSome better-ranked companies are discussed below.Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 (ending March 2025) earnings has been stable.AECOM ACM presently carries a Zacks Rank #2 (Buy). ACM delivered a trailing four-quarter average earnings surprise of 5.2%. In the past 60 days, the Zacks Consensus Estimate for AECOM’s fiscal 2025 (ended September 2025) earnings has increased 3%.MasTec MTZ presently carries a Zacks Rank of 2. MTZ delivered a trailing four-quarter average earnings surprise of 40.2%.In the past 60 days, the consensus estimate for its 2024 earnings has remained stable.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Johnson Controls International plc (JCI): Free Stock Analysis Report AECOM (ACM): Free Stock Analysis Report Graham Corporation (GHM): Free Stock Analysis Report MasTec, Inc. (MTZ): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks