Story updated at 10 a.m. to reflect market activity.
Johnson Controls fell 2.1% to $45.49 in morning trading.
Wells Fargo analysts said the company now has less upside potential.
"Relative to our prior expectation, we believe the company has less potential to outperform earnings expectations in the next couple of quarters," analyst Richard M. Kwas wrote. "As such, share price appreciation over the next 612 months is more modest than originally thought. We believe the shares have potential catalysts (on going portfolio transformation, better operating execution, recovery in the institutional construction markets, etc.) that could drive outperformance relative to the market over the next year. We maintain our Outperform rating."
Separately, TheStreet Ratings team rates JOHNSON CONTROLS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate JOHNSON CONTROLS INC (JCI) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 12.8%. Since the same quarter one year prior, revenues slightly increased by 4.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that JCI's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.
- Powered by its strong earnings growth of 32.69% and other important driving factors, this stock has surged by 39.82% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- JOHNSON CONTROLS INC has improved earnings per share by 32.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JOHNSON CONTROLS INC reported lower earnings of $1.71 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $1.71).
- The net income growth from the same quarter one year ago has exceeded that of the Auto Components industry average, but is less than that of the S&P 500. The net income increased by 30.6% when compared to the same quarter one year prior, rising from $359.00 million to $469.00 million.
- You can view the full analysis from the report here: JCI Ratings Report