What Does Johnson Controls International plc's (NYSE:JCI) Share Price Indicate?

By
Simply Wall St
Published
December 02, 2020
NYSE:JCI

Let's talk about the popular Johnson Controls International plc (NYSE:JCI). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Johnson Controls International’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Johnson Controls International

What's the opportunity in Johnson Controls International?

Johnson Controls International appears to be overvalued by 30% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$46.27 on the market compared to my intrinsic value of $35.46. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Johnson Controls International’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Johnson Controls International generate?

earnings-and-revenue-growth
NYSE:JCI Earnings and Revenue Growth December 2nd 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Johnson Controls International. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? JCI’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe JCI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on JCI for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for JCI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 5 warning signs for Johnson Controls International and you'll want to know about them.

If you are no longer interested in Johnson Controls International, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. 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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