Johnson Controls (NYSE:JCI): Valuation Spotlight After Data Center Cooling Innovation and Accelsius Investment

Johnson Controls International (NYSE:JCI) has stepped up its data center game by launching the Silent-Aire Coolant Distribution platform and making a strategic investment in Accelsius, a specialist in energy-efficient liquid cooling technology.

See our latest analysis for Johnson Controls International.

Momentum has been building for Johnson Controls International, with a 33.7% year-to-date share price return and a standout 38.3% total shareholder return over the past year. This reflects bullish sentiment around its latest advances in data center sustainability and cooling technologies. Despite some turbulence from recent legal headwinds and the usual market volatility, the stock’s five-year total shareholder return of 172.5% points to substantial, long-term value creation as the company reshapes its portfolio for resilient, high-growth segments.

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With the stock up sharply this year and trading close to analyst price targets, it begs the question: is Johnson Controls still undervalued, or is the market already factoring in its long-term growth story?

Most Popular Narrative: 8.2% Undervalued

With Johnson Controls International’s narrative fair value sitting at $114.95, above the latest close of $105.55, the prevailing story points to room for further upside, provided future growth and margin forecasts play out as anticipated.

The new organizational model and Lean practices are expected to drive revenue growth and enhance net margins significantly. Strong demand in key platforms and expanded service capabilities will contribute to more predictable revenue and higher margins.

Read the complete narrative.

Big promises rest on ambitious targets for margins, revenue and earnings. The most captivating part? This narrative depends on forecasts rarely seen outside the tech sector. Which bold underlying drivers explain the potential $10 gap to fair value? You’ll want to see the projections reading between the lines, as these assumptions may surprise you.

Result: Fair Value of $114.95 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, operational complexity and transitional challenges from restructuring could limit margin improvements. This could potentially undermine the company’s ambitious growth narrative if not managed carefully.

Find out about the key risks to this Johnson Controls International narrative.

Another View: The Multiples Perspective

While the narrative points to upside, the market’s standard ratio tells a different story. Johnson Controls currently trades at a price-to-earnings ratio of 34.7x, noticeably above both the industry’s 21.9x and its fair ratio of 32.5x. This heightens valuation risk and suggests less immediate value. Is the optimism already priced in?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Johnson Controls International Narrative

If you’d rather test your own ideas or take a fresh angle on Johnson Controls International’s outlook, it’s easy to dig into the numbers and form a personalized forecast of your own in just a few minutes. Do it your way

A great starting point for your Johnson Controls International research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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