Johnson Controls Inc Stock Buy Recommendation Reiterated (JCI)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Johnson Controls (NYSE: JCI) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • Compared to its closing price of one year ago, JCI's share price has jumped by 35.45%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
  • The current debt-to-equity ratio, 0.57, 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 0.64, displays a potential problem in covering short-term cash needs.
  • JOHNSON CONTROLS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, JOHNSON CONTROLS INC reported lower earnings of $1.79 versus $2.36 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $1.79).
  • JCI, with its decline in revenue, slightly underperformed the industry average of 8.0%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $217.00 million or 10.69% when compared to the same quarter last year. Despite a decrease in cash flow JOHNSON CONTROLS INC is still fairing well by exceeding its industry average cash flow growth rate of -28.05%.

Johnson Controls, Inc. engages in building efficiency, automotive experience, and power solutions businesses worldwide. Johnson Controls has a market cap of $25.7 billion and is part of the consumer goods sector and automotive industry. The company has a P/E ratio of 28.00, above the S&P 500 P/E ratio of 18.00. Shares are up 19.6% year to date as of the close of trading on Wednesday.

You can view the full Johnson Controls Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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