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How Did Johnson Controls Perform in 3Q16?

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Jul. 25 2016, Updated 9:08 a.m. ET

Price movement

Johnson Controls (JCI) has a market cap of $29.6 billion. It rose by 2.7% to close at $45.53 per share on July 21, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 3.2%, 3.0%, and 17.0%, respectively, on the same day.

JCI is trading 4.4% above its 20-day moving average, 4.7% above its 50-day moving average, and 12.8% above its 200-day moving average.

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Related ETF and peers

The Vanguard Large-Cap ETF (VV) invests 0.15% of its holdings in Johnson Controls. The ETF tracks a market-cap-weighted index that covers 85% of the market capitalization of the US equity market. The YTD price movement of VV was 6.9% on July 21.

The market caps of Johnson Controls’s competitors are as follows:

  • Honeywell International (HON) — $91.1 billion
  • Raytheon Company (RTN) — $40.0 billion
  • Lear Corporation (LEA) — $8.6 billion

Performance of Johnson Controls in 3Q16

Johnson Controls reported 3Q16 net sales of $9.5 billion, a fall of 1.0% compared to net sales of $9.6 billion in 3Q15. Sales from its Building Efficiency and Power Solutions segments rose by 33.0% and 3.1%, respectively. Sales from its Automotive Experience segment fell by 19.3% in 3Q16 compared to 3Q15. The company’s gross profit margin rose by 12.9%, and its income from continuing operations before income taxes fell by 11.0% in 3Q16 compared to 3Q15.

Its net income and EPS (earnings per share) rose to $383.0 million and $0.59, respectively, in 3Q16 compared to $178.0 million and $0.27, respectively, in 3Q15.

JCI’s cash and cash equivalents fell by 21.8%, and its inventories rose by 25.0% in 3Q16 compared to 4Q15. Its current ratio and long-term debt-to-equity ratio fell to 0.92x and 0.54x, respectively, in 3Q16 compared to 1.0x and 0.55x, respectively, in 4Q15.

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Quarterly dividend

Johnson Controls has declared a regular quarterly cash dividend of $0.29 per share on its common stock. The dividend will be paid on August 19, 2016, to shareholders of record at the close of business on August 5, 2016.

Projections

Johnson Controls has made the following projections:

  • It expects the EPS in the range of $3.95 to $3.98 per share for fiscal 2016, which reflects strong operational performance.
  • It expects EPS in the range of $1.17 to $1.20 for fiscal 4Q16.

This guidance does not include the impact of the Tyco merger and transaction, integration and separation costs, year-end pension and postretirement mark-to-market adjustments and other non-recurring items.

In the next part, we’ll take a look at Sonoco Products.

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