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Johnson Controls (JCI) has been in the spotlight lately, having just released its sales and earnings guidance for 2014. While the outlook came below analyst expectations, there have been a lot of positive things said about the auto parts maker. Is it time to buy JCI? Find out now.
Founded in 1885, Johnson Controls is a diversified technology and industrial company that specializes in four areas: Building efficiency, facilities management, automotive and advanced batteries and automotive components. The company employs 170,000 worldwide and serves customers in some 150 countries.
JCI recently went ex-dividend on December 12. Shareholders of record will receive 22 cents per share on January 6. This quarter’s dividend represents a 16% increase over the prior quarter, and the company has increased its payout by nearly 70% in the past three years. The stock currently yields 1.6%. The company also recently started a $3.65 billion stock buyback program, another bonus to shareholders.
Looking ahead to FY 2014, Johnson Controls expects earnings between $3.15 to $3.30 per share on $43.8 billion in sales. This represents between 18.4% and 24.1% annual earnings growth and 2.6% sales growth.
However, this was on the lower end of analyst estimates, which had called for $3.31 EPS on $44.29 billion in sales. Since the company released its 2014 projections, the analyst community has revised its consensus earnings estimate down to $3.26 per share. While this still represents solid earnings growth, JCI isn’t looking quite as good in the new year as it had been.
JCI spent the first six months of the year at a D-rated sell. That all changed in July, when the stock suddenly jumped to a B-rated buy. What happened? Well, part of it was that the company’s fundamentals firmed up. JCI receives an A for earnings momentum and a B for return on equity. But there’s still more work to be done–the company receives C-ratings on sales growth, operating margin growth, earnings growth, analyst earnings revisions and cash flow.
So JCI gets a C-rating for its Fundamental Grade. JCI receives a B for its Quantitative Grade, indicating that institutional buying pressure has also improved of late.
Bottom Line: As of this posting I consider JCI a B-rated Buy.