The shares of Johnson Controls (NYSE:JCI) have gained in price significantly this year and are trading above their 50-day and 200-day moving averages. However, the company has faced several headwinds related to supply chain issues and inflation, and management expects those headwinds to remain in the near term. Also, if the COVID-19 omicron variant drives another infection wave, JCI is expected to be severely impacted. So, is it wise to scoop up JCI shares now? Let’s discuss.Johnson Controls International plc (JCI) in Cork, Ireland, operates globally as a diversified technology and multi-industrial company. JCI was significantly impacted by the COVID-19 pandemic-led decline in non-residential construction activity. The company has been dealing with supply chain disruptions and inflation pressure over the past few months and expects these headwinds to remain in the near term. However, JCI is focused on accelerating its growth capabilities, leveraging innovative technologies, and capitalizing on its growth vectors. And its cost-reduction programs are expected to help the company improve its margins. “I am excited and encouraged by the pace of demand in many of our end markets and our record backlogs, both of which position us well for fiscal 2022,” asserted George Oliver, chairman, and CEO.
For the fourth quarter, ended September 30, JCI’s non-GAAP sales increased 7% year-over-year to $6.40 billion, while its non-GAAP net income increased 12% from its year-ago value to $628 million. The company’s EPS increased 16% year-over-year to $0.88.
As overall economic activity picks up, the demand for building products is rising, which should benefit JCI. However, the newly identified COVID-19 omicron variant is threatening the global economic recovery with rising cases of infection. If the new variant leads to another COVID-19 surge, it could hamper the economic recovery and hurt JCI’s earnings growth. The company’s net income has declined at an 8.9% CAGR over the past three years.