By Rob Otman
Johnson Controls (NYSE: JCI) is a large cap company that operates within the building products industry. Its market cap is $40 billion today, and the total one-year return is 10.2% for shareholders.
Johnson Controls stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Johnson Controls reported a recent EPS growth rate of 4.34%. That’s below the building products industry average of 136.73%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the building products industry is 24.4. And Johnson Controls’ ratio comes in at 14.3. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Johnson Controls stock is 68.6%. That’s below the building products industry average of 242.85%. The company is less leveraged.
✗ Free Cash Flow per Share Growth: Johnson Controls’ FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of Johnson Controls comes in at 7.22% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Johnson Controls’ profit margin is below the building products average of 8.89%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Johnson Controls is -3.61%, and that’s below its industry average ROE of 42.31%.
Johnson Controls stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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