This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
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Johnson Controls has been one the stocks that tends to be on dividend investor’s lists primarily because of its very good track record of dividend increases. Add to that a number of years of good performance and you have a stock that has done well for investors. I wanted to see if the current price looked like a good value in light of the fundamentals.
The Company: Johnson Controls, Inc. (JCI-NYSE)
The Company provides heating, ventilating, air conditioning products & services to both automotive original equipment manufacturers & battery aftermarket. It also designs & manufactures interior systems & products for passenger cars & light trucks etc.
| Yes | |
| Yes |
THE FUNDAMENTALS
Revenue
Click to EnlargeRevenue Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with < 2 Down Years | 0.5 |
| Choppy with > 2 Down Years | 0.0 |
| My Revenue Score | 1.0 |
Earnings Per Share
Click to EnlargeEarnings Per Share Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with < 2 Down Years | 0.5 |
| Choppy with > 2 Down Years | 0.0 |
| My EPS Score | 1.0 |
TOTAL FUNDAMENTALS SCORE: 2.0
THE RATIOS
Return on Equity
Click to EnlargeReturn on Equity Scoring
| Criteria | Scoring |
| Above 15% for Last 5 Years | 1.0 |
| At Least One Year Below 15% in Last 5 Years | 0.0 |
| My ROE Score | 0.0 |
Other Ratios
| Ratio | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Debt to Equity | < 0.50 | 0.48 | 1.0 |
| Payout Ratio | < 60% | 17% | 1.0 |
| Credit Rating | > BBB+ | A- | 1.0 |
| Total Ratio Score | 3.0 |
TOTAL RATIOS SCORE: 3.0
DIVIDEND DATA
Annual Dividends
Click to EnlargeDividend Scoring
| Criteria | Scoring |
| 25+ Years of Dividend Growth | 1.0 |
| 10+ Years of Dividend Growth | 1.0 |
| Less Than 10 Years of Dividend Growth | 0.0 |
| My Dividend Growth Score | 2.0 |
TOTAL DIVIDEND GROWTH SCORE: 2.0
STOCK VALUATION
| Valuation Metric | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Dividend Yield | Cur Yld > 10 Yr Avg Yld | 1.2% | 1.0 |
| Div Yld Compared to SPY Div Yld | Cur Yld > SPY Yld | 1.8% | 0.0 |
| P/E Ratio | Cur P/E < 10 Yr Avg P/E | 13.4 | 0.0 |
| Relative P/E | Relative P/E < 1.0 | 1.01 | 0.0 |
| Price to Sales | < 1.5 | 0.54 | 1.0 |
| Total Ratio Score | 2.0 |
Canadian Shareowner’s Association Stock Selection Guide Software Buy Price
| Buy Zone |
Maybe Zone |
Sell Zone |
Current Price | Rating | Scoring (Buy=1.0, Other=0.0) |
| 1.0 |
TOTAL STOCK VALUATION SCORE: 3.0
SUMMARY
Points Earned:
10 out of 14
The stock is rated MEDIUM with 10 points earned through my analysis of the stock. This is a case where the strong performance has already been priced into the stock. Although my CSA software is showing the stock as a buy, I would be cautious in buying it as the current P/E ratio is higher than the 10 year average. In addition, the relative P/E is showing the stock as being slightly overvalued. I would much prefer to see the stock price at closer to $26 before I pulled the trigger.
| Rating | Points Required |
| High | 11+ points |
| Medium | 8-10 points |
| Low | < 8 points |
Reminder: This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
The Dividend Guy does not own shares in JCI
I really like this thorough analysis. How long does it take you to do this? And where did you get the CSA software from? Do you know how they arrived at the price targets?
Hi Kirsten,
The setup of the analysis is what takes the most time – creating the system I use has taken a number of years and many reiterations. It is a learning process.
The software I use is from the Canadian Shareowners Association (shareowner.com) – it is Canadian based. In the U.S. I have heard of people having good success with betterinvesting.org. I am not sure if there is something similar in the UK – perhaps one of my readers has an idea on this?