Is Johnson Controls International (NYSE:JCI) A Risky Investment?
Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...
Has the U.S. Building Industry valuation changed over the past few years?
|Sat, 27 Nov 2021||US$303.2b||US$150.8b||US$12.5b||22x|
|Mon, 25 Oct 2021||US$286.6b||US$144.8b||US$11.6b||24.1x|
|Wed, 22 Sep 2021||US$272.9b||US$141.9b||US$11.3b||19.4x|
|Fri, 20 Aug 2021||US$287.0b||US$141.9b||US$11.3b||19.5x|
|Fri, 04 Jun 2021||US$273.1b||US$129.0b||US$9.0b||25.1x|
|Mon, 08 Mar 2021||US$243.2b||US$129.5b||US$6.8b||27.8x|
|Thu, 10 Dec 2020||US$219.1b||US$126.9b||US$5.6b||23.2x|
|Wed, 02 Sep 2020||US$180.1b||US$114.1b||US$4.9b||26.5x|
|Sat, 06 Jun 2020||US$136.5b||US$117.3b||US$5.9b||19.5x|
|Tue, 10 Mar 2020||US$138.4b||US$104.5b||US$5.5b||20.2x|
|Mon, 02 Dec 2019||US$148.7b||US$103.5b||US$5.2b||24.5x|
|Thu, 05 Sep 2019||US$136.9b||US$103.8b||US$5.6b||20.5x|
|Sun, 09 Jun 2019||US$130.9b||US$104.2b||US$6.3b||19.4x|
|Sat, 02 Mar 2019||US$128.1b||US$100.7b||US$5.9b||19.2x|
|Tue, 04 Dec 2018||US$124.8b||US$101.2b||US$6.1b||17.9x|
Current Industry PE: Investors are relatively neutral on the industry at the moment, considering it's trading close to its 3-year average PE ratio of 21.6x. It appears they believe that earnings will grow in-line with historical growth rates.
Past Earnings Growth: The earnings for companies in the Building industry have grown 27% per year over the last three years, and revenues for these companies have grown 14% per year. This means that more sales are being generated by these companies overall, and subsequently their profits are increasing too.
Which industries have driven the changes within the U.S. Building industry?
Industry PE: Investors are most optimistic about the Building Products industry, which is trading close to its 3-year average PE ratio of 21.6x. However analysts are expecting annual earnings growth of 12%, which is lower than the prior year's growth of 45% per year. So the market might believe that analysts are underestimating future growth.
Forecasted Growth: Analysts are most optimistic on the Building Products industry, expecting annual earnings growth of 12% over the next 5 years. However this is lower than its past earnings growth rate of 45% per year.
Which companies have driven the market over the last 7 days?
Alpha Pro Tech
Johnson Controls International
Advanced Drainage Systems
Fortune Brands Home & Security
Fortune Brands is executing well despite cost and supply chain headwinds. These headwinds are transient, and management has set a target of operating margins in the 16% to 17% range by FY2023. I believe the stock can offer low double-digit returns over the next couple of years.