Johnson Controls (JCI) Q4 Earnings: What's In The Cards?

Johnson Controls International plc (NYSE:JCI) is set to report fourth-quarter fiscal 2018 results, before the opening bell on Nov 8.

The company beat estimates in three out of the trailing four quarters and matched estimate in one occasion. In the trailing four quarters, average surprise was 2.3%.

Long-term earnings per share growth (three-five years) for the company are pegged at 11%.

In the last six months, Johnson Controls’ shares lost 9.8% compared with 4.4% decline recorded by the industry it belongs to.

Let’s see, how things have shaped up for the upcoming announcement.

Factors Influencing This Quarter

For fiscal 2018, Johnson Controls tweaked the adjusted EPS guidance for fiscal 2018 to $2.80-$2.82 from the previous $2.75 to $2.85. The company is divesting its multiple businesses, which is adversely impacting its profits and revenues.

Johnson Controls is also exposed to volatility in commodity prices. Examples of highly volatile commodities used in the Building Efficiency business are steel, aluminum, copper and fuel while lead is used in the Power Solutions business.

For the soon-to-be-released results, the Zacks Consensus Estimate for total revenues for the Building Technologies & Solutions segment is pegged at $6.1 billion. In third-quarter fiscal 2018, total revenues for the Building Technologies & Solutions segment were $6.3 billion.

Similarly, the Zacks Consensus Estimate for total revenues at the company’s Power Solutions segment stands at $2.1 billion. In third-quarter fiscal 2018, total revenues for the Power Solutions segment were $1.8 billion.

Earnings Whispers

Our proven model does not conclusively show that Johnson Controls is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Johnson Controls has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are currently pegged at 93 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Johnson Controls currently carries a Zacks Rank #3.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few auto stocks worth considering from the same space, comprising the right combination of elements to come up with an earnings beat this time around:

Meritor, Inc. (NYSE:MTOR) has an Earnings ESP of +13.30% and is a Zacks #3 Ranked player.

You can see the complete list of today’s Zacks #1 Rank stocks here.

BorgWarner Inc. (NYSE:BWA) has an Earnings ESP of +0.03% and a Zacks Rank #3.

Navistar International Corporation (NYSE:NAV) has an Earnings ESP of +0.20% and a Zacks Rank #3.

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