Do Johnson Controls International's (NYSE:JCI) Earnings Warrant Your Attention?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like Johnson Controls International (NYSE:JCI), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Johnson Controls International with the means to add long-term value to shareholders.

View our latest analysis for Johnson Controls International

Johnson Controls International's Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. To the delight of shareholders, Johnson Controls International has achieved impressive annual EPS growth of 42%, compound, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for Johnson Controls International remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 6.6% to US$27b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Johnson Controls International?

Are Johnson Controls International Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$36b company like Johnson Controls International. But we do take comfort from the fact that they are investors in the company. We note that their impressive stake in the company is worth US$115m. We note that this amounts to 0.3% of the company, which may be small owing to the sheer size of Johnson Controls International but it's still worth mentioning. This should still be a great incentive for management to maximise shareholder value.

Does Johnson Controls International Deserve A Spot On Your Watchlist?

Johnson Controls International's earnings per share growth have been climbing higher at an appreciable rate. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Johnson Controls International very closely. You still need to take note of risks, for example - Johnson Controls International has 3 warning signs we think you should be aware of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.