JCI - Embedded Expectations Analysis - 2018 07 30
Johnson Controls International plc (JCI:USA) currently trades near historical lows relative to UAFRS-based (Uniform) Earnings, with a 15.7x Uniform P/E. However, even at these levels, the market is pricing in expectations for Uniform ROA to grow from 13% in 2017 to 16% through 2022, representing levels never achieved before, driven by positive macro trends and favorable market repositioningSpecifically, markets appear confident in global macro tailwinds driving growth in the building products industry, projecting an upswing in infrastructure development projects. The market also appears confident that JCI will be among the leaders in the smart building market segment, with automation and energy efficiency trends set to expand. Furthermore, the market appears confident that JCI has improved its market positioning, after multiple divestitures and acquisitions led to them depart from a large portion of its battery business, and ease their corporate tax burden by moving their headquarters to Cork, Ireland
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