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Johnson Controls stock (NYSE: JCI) has been on the rise after reports emerged that Elliott Management, one of the largest activist funds in the world, has built a position of over $1 billion in the company. JCI stock has seen gains of over 20% this year and a strong overall increase of 55% from early 2021 to around $70 currently, outperforming the S&P 500 index over this period.

However, the increase in JCI stock has not been consistent, with returns of 75% in 2021, -21% in 2022, and -10% in 2023. In comparison, the S&P 500 saw returns of 27% in 2021, -19% in 2022, and 24% in 2023, indicating that JCI underperformed the index in 2022 and 2023. Consistently beating the S&P 500 has been challenging for individual stocks in recent years, making it important to consider the performance of stocks like Johnson Controls in comparison to broader market trends and the Trefis High Quality Portfolio.

With the current uncertain macroeconomic environment, including high oil prices and elevated interest rates, there are concerns about whether JCI may face a situation similar to 2022 and 2023, where it underperformed the S&P 500. While Elliott Management’s stake in the company is seen as a positive development, some analysts believe that JCI stock is now fully valued, based on a valuation estimate of $70 per share and an expected earnings multiple of 19x for fiscal 2024.

Johnson Controls has not seen significant revenue growth in recent quarters, attributed to weakness in China and lower demand for residential HVAC. However, the company has benefited from strong demand for commercial HVAC, with expectations of mid-single-digit revenue growth for full-fiscal 2024 and earnings between $3.60 and $3.75 per share. Despite trading at around 20x forward earnings, some analysts believe that JCI stock is appropriately priced, and investors may want to wait for a potential dip before entering the market.

While JCI stock may appear fully valued, it is important to consider how Johnson Controls’ peers are performing on important metrics. Comparisons with other companies can provide valuable insights into the stock’s positioning within its industry. Investors may also want to explore other market-beating portfolios and price estimates provided by Trefis for a comprehensive understanding of the investment landscape.

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