Johnson Controls International plc JCI is scheduled to release third-quarter fiscal 2024 (ended June 2024) financial numbers on Jul 31, before market open.
The company’s earnings surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing in one. The average earnings surprise was 0.6%. In the last reported quarter, its earnings of 78 cents per share beat the consensus estimate of 75 cents by 4%.
The consensus estimate for fiscal third-quarter revenues is pegged at $7.36 billion, indicating an increase of 3.2% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings is pinned at $1.08 per share, indicating an increase of 4.85% from the year-ago quarter’s reported figure.
Key Factors and Estimates
The Building Solutions North America segment is expected to have benefited on the back of solid momentum in the heating, ventilation and air conditioning (HVAC) platform in data centers & strength in controls businesses. We expect the segment’s revenues to be $2.9 billion, implying an increase of 8.5% from the year-ago reported figure.
The Building Solutions Europe, the Middle East, Africa/Latin America segment is expected to have benefited from the increase in demand for HVAC platforms across Latin America and Middle East regions, and strength in industrial refrigeration and service businesses. Our estimate for the segment’s revenues is pegged at $1.1 billion, indicating a 3% increase from the year-ago reported figure.
Investments in digital offerings, like the OpenBlue digital platform that plays an integral part in meeting customer needs, are expected to have driven the company’s revenues.
We expect the company’s total revenues to be $7.4 billion for the fiscal third quarter, indicating an increase of 3.3% year over year. Adjusted earnings are expected to be $1.07 per share, indicating a 4.3% increase from the year-ago quarter’s reported number.
However, Johnson Controls is expected to have put up a weak show due to weakness across its Global Products and Building Solutions Asia Pacific segments. A decrease in demand for global residential HVAC platforms and softness in the fire and security, and global ducted residential businesses are expected to have hurt the Global Products segment.
Softness in the install business, due to challenging end-market conditions in China, is likely to have marred the performance of the Building Solutions Asia Pacific segment’s Install business. We expect revenues from the segment to decrease 6.2% year over year to $690.7 million.
The escalating cost of sales poses a threat to Johnson Controls’ bottom line. High commodity prices are expected to have pushed up the cost of sales, which is likely to have been reflected in its margins in the fiscal third quarter. We expect the company’s cost of sales to escalate 4.7% year over year.
JCI has considerable exposure to overseas markets. Given the company’s substantial international operations, foreign currency headwinds are likely to have marred its margins and profitability.
Johnson Controls International plc Price and EPS Surprise 
Johnson Controls International plc price-eps-surprise | Johnson Controls International plc Quote
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for JCI this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as elaborated below.
Earnings ESP: Johnson Controls has an Earnings ESP of +0.50% as the Most Accurate Estimate is pegged at $1.09 per share, which is higher than the Zacks Consensus Estimate of $1.08. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: Johnson Controls presently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies within the broader Industrial Products sector, which according to our model, have the right combination of elements to beat on earnings in this reporting cycle.
Atkore Inc. ATKR has an Earnings ESP of +0.62% and a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to release second-quarter results on Aug 6. Atkore’s earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 15.4%.
Emerson Electric Co. EMR has an Earnings ESP of +1.12% and a Zacks Rank of 2. The company is slated to release third-quarter results on Aug 07.
Emerson’s earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing the mark in one, the average surprise being 10.7%.
The Middleby Corporation MIDD has an Earnings ESP of +0.44% and a Zacks Rank of 3, at present. It is slated to release second-quarter results on Aug 1.
Middleby’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 2.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Free Report – 3 Stocks Sneaking Into Hydrogen Energy
Demand for clean hydrogen energy is projected to reach $500 billion by 2030 and grow 5-FOLD by 2050. No guarantees, but three companies are quietly getting the jump on their competition.
Zacks Investment Research is temporarily offering an urgent Special Report naming and explaining these emerging powerhouses primed to boom. Click below for Hydrogen Energy: 3 Industrial Giants to Ride the Next Renewable Energy Wave.
See Stocks Now >>Emerson Electric Co. (EMR) : Free Stock Analysis Report
Johnson Controls International plc (JCI) : Free Stock Analysis Report
The Middleby Corporation (MIDD) : Free Stock Analysis Report
Atkore Inc. (ATKR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
