JCI - Embedded Expectations Analysis - 2020 11 10
Johnson Controls International plc (JCI:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 19.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about OpenBlue, the sustainability of a rebound in profitability, and the air quality marketSpecifically, management may be concerned about the sustainability of improvement in their Global Products division, and they may lack confidence in their ability to continue improving free cash flow. Moreover, they may be concerned about continued EPS headwinds, increased costs, and OpenBlue's ability to deliver enhanced value for customers. Management may also be exaggerating opportunities to build out additional services, and better tailor services with OpenBlue, and they might be exaggerating the opportunity for incremental M&A activity. Finally, they may have concerns about the sustainability of strength in residential indoor air quality products, and they might be exaggerating the market for air purification offerings
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