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TheStreet Open House

Why Johnson Controls (JCI) Stock Is Higher This Morning

Stock quotes in this article: JCI

NEW YORK (TheStreet) -- Shares of Johnson Controls Inc. (JCI) are up 2.14% to $45.74 after the multi-industrial company, and Yanfeng Automotive Trim Systems Co., Ltd., a wholly owned subsidiary of Huayu Automotive Systems Co., Ltd., the component group of Shanghai Automotive Industry Corp., announced the signing of a definitive agreement to form a global automotive interiors joint venture.

The agreement is a noncash transaction comprised of asset contributions by the two parties that will create the largest automotive interiors company in the world with revenues of approximately $7.5 billion.

Yanfeng will hold the majority 70% in the JV, and Johnson Controls will have a 30% share.

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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, compelling growth in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • JCI's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 3.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Auto Components industry. The net income increased by 59.1% when compared to the same quarter one year prior, rising from $164.00 million to $261.00 million.
  • Net operating cash flow has significantly increased by 237.32% to $732.00 million when compared to the same quarter last year. In addition, JOHNSON CONTROLS INC has also vastly surpassed the industry average cash flow growth rate of 129.31%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • JOHNSON CONTROLS INC reported significant earnings per share improvement 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 $1.70 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($3.15 versus $1.70).
  • You can view the full analysis from the report here: JCI Ratings Report

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