Johnson Controls (JCI) Tops Q1 Earnings on Higher Volumes – Tale of the Tape

However, Johnson Controls faces strong competition from major domestic and international manufacturers and distributors of lead-acid batteries, particularly in North America, Europe and Asia. Moreover, Original Equipment manufacturers (OEMs)are continuously pressurizing suppliers such as Johnson Controls to reduce prices. If the company is unable to offset the pricing reductions through improved operating efficiencies and reduced expenditures, it will adversely affect the results. Due to this, investors are eagerly awaiting Johnson Controls’ earnings report.

Estimate Trend & Surprise History

Investors should note that the first-quarter (ended Dec 31, 2014) earnings estimate for Johnson Controls has been stationary over the past week and month. The Zacks Consensus Estimate has remained static at 77 cents over these periods.

Johnson Controls has a mixed history of earnings surprises. It has beaten the Zacks Consensus Estimate in 2 of the trailing 4 quarters with a positive average beat of 0.97%.

Earnings

Johnson Controls delivered adjusted earnings of 79 cents per share, surpassing the Zacks Consensus Estimate of 77 cents. The company reported higher profitability due to increased volumes and continuous focus on execution improvements.

Revenues

Johnson Controls reported revenues of $10.67 billion, uo 1% year over year. However, revenues missed the Zacks Consensus Estimate of $10.79 billion.

Key Stats/Developments to Note

In fiscal 2015, Johnson Controls expects better results than fiscal 2014 based on higher profitability in all three businesses. The company believes that its strategic and financial plans will lead to better performance and higher operating margins. The company expects earnings per share in the second quarter to be in the range of 74 cents to 76 cents, while in the fiscal year 2015 it should be in the band of $3.55 to $3.70.

On Jan 21, Johnson Controls, Hitachi, Ltd. and Hitachi Appliances, Inc. signed an agreement to form a global joint venture. The joint venture will be producing the variable refrigerant flow (VRF) technology, room air conditioners and absorption chillers to satisfy the rising demands for energy efficient air conditioner. This joint venture is expected to record sales of $3 billion in 2016.

Zacks Rank

Currently, Johnson Controls has a Zacks Rank #3 (Hold), but that could change following its earnings report which has just released.

Market Reaction

Johnson Controls’ shares were inactive following the release. It would be interesting to see how the market reacts to the results during the trading session today.

Check back later for our full write up on Johnson Controls’ earnings report!

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