JOHNSON CONTROLS INTERNATIONAL PLC (JCI): what the price requires
At today's price, JOHNSON CONTROLS INTERNATIONAL PLC (JCI) is priced for today's economics sustained for ~15.2 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/JCI
Headline
| Field | Value |
|---|---|
| Ticker | JCI |
| Company | JOHNSON CONTROLS INTERNATIONAL PLC |
| Current price | $143.65/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Must persist for | 15.2y |
| Multiple paid | 98x operating income |
Solve inputs: computed at a 9.4% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.4 years.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +0.71σ |
| cohort percentile (of 225 peers) | 100 |
| sustained it ~10 years at this level | 14% |
| implied end-window share | 1% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.93x | 4 | expensive |
| Earnings | 1.60x | 2 | expensive |
| Relative | 1.09x | 4 | expensive |
| Growth | 0.80x | 1 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=11)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $0.00 | — | no | Negative/zero FCF — equity value floored at $0 |
| DCF Exit Multiple | Growth | $0.00 | — | no | Negative/zero FCF or EBITDA — equity value floored at $0 |
| Relative Valuation | Relative | $65.47 | 2.19x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 14.4x / 18.0x / 21.6x (bear / base = reference held flat / bull), EV/EBITDA 26.4x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $62.17 | 2.31x | yes | BV/sh $22.02, ROE (TTM) 26.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $105.56 | 1.36x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $179.08 | 0.80x | yes | Rev $24.4B, growth 30% (input: historical growth; tapered), Terminal P/S: 2.9x / 3.6x / 4.3x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $193.55 | 0.74x | yes | EPS $5.53, growth 35% (input: historical EPS growth), PEG=0.71 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $92.64 | 1.55x | yes | BV $22.02 + 5yr PV of (ROE (TTM) 26.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $52.34 | 2.74x | yes | √(22.5 × EPS $5.53 × BVPS $22.02) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $2.91 | 49.36x | yes | EBITDA $0.16B × sector EV/EBITDA 12.0x (excluded from median) |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $178.43 | 0.81x | yes | EPS $5.53 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $99.48 | 1.44x | yes | Revenue $24.43B × sector P/S 2.5x |
| PEG Fair Value | Relative | $207.38 | 0.69x | yes | EPS $5.53 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $59.78 | 2.40x | yes | EPS $5.53 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (buyback) | -3.3% |
| Burning cash | no |
Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.
Operating profit is negative or near zero and there is no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so interest coverage cannot be computed honestly.
Bullet Takeaways
- Johnson Controls is a building-technology company that, in its own words, "sells, installs, and services HVAC, controls, building management, refrigeration, integrated electronic security systems, integrated fire detection and suppression systems, and digital (software) solutions."
- The surprising metric is the order book: orders grew 30% and backlog hit a record $20 billion, driven by data-center demand, a growth profile that does not fit the old image of a slow industrial.
- At $144.87 the price is rich on the asset and earnings-power methods and justified mainly by the relative-multiple lens, so the stock leans on the data-center re-rating, with management raising full-year adjusted EPS guidance to about $4.85.
Bull Case
The counterintuitive fact about Johnson Controls is that a company long viewed as a mature, low-growth building-products maker just posted orders up 30% and a record $20 billion backlog. That is not the order book of a sleepy industrial; it is the order book of a company that has landed in the middle of one of the strongest secular demand waves around. The driver is data centers, which need exactly what Johnson Controls makes at scale: applied HVAC, chillers, cooling-distribution units, air handling, and the control systems that tie a building's mechanical infrastructure together. As AI compute concentrates in ever-denser facilities, the thermal-management content per data center rises, and Johnson Controls is positioned to supply successive waves of that content.
The second-quarter results show the surge converting into profit. Sales rose 8% to $6.1 billion with organic growth of 6%, led by applied HVAC strength and mid-single-digit growth in the service and systems businesses, and adjusted net income reached $730 million. The service franchise is the quiet engine: a large installed base of building systems generates recurring, high-margin maintenance and upgrade revenue that grows steadily regardless of the new-construction cycle, and management is steering the company toward this stickier, software-and-service-rich mix. The company frames its strategy around helping customers meet "sustainability, heat management and energy efficiency goals," which is precisely where building-owner spending is heading.
The combination of a record backlog, a recurring service base, and improving execution is why management raised full-year adjusted EPS guidance to about $4.85, implying roughly 30% growth, while holding organic sales growth near 6% with strong operating leverage. Management expects about 70% of the backlog to convert to revenue within twelve months, giving good visibility into the coming year. Capital allocation supports the per-share story, with the share count shrinking about 3% a year. The bull case is that Johnson Controls has quietly transformed from a low-growth industrial into a data-center-and-service-led grower, with a record backlog providing visibility and a high-margin service annuity underpinning the earnings, a profile the market is only beginning to re-rate.
Bear Case
The structural truth a Johnson Controls holder has to face is that the multiples are pricing a data-center transformation that is still mostly in the backlog, not yet in the realized earnings. The stock has re-rated on the order surge and the AI-cooling narrative, but a record backlog is a promise of future revenue, not revenue itself, and the company itself cautions that conversion is partly constrained by data-center customers' power-infrastructure delays. When the price leaps ahead of the delivered results on the strength of a story about what is coming, the gap between the narrative and the booked earnings is the risk, and here that gap is wide: the price embeds a successful, sustained data-center build-out that the income statement has only started to reflect.
The valuation methods make the disconnect concrete. At $144.87 the asset and earnings-power methods land far below the price, with the zero-growth earnings-power value near $6 and the relative-multiple method near $58; only by leaning on the more generous relative and growth lenses does the price find support, and the framework flags the name as high with the cohort signal fully tripped, meaning it sits at the top of its peer group. The inversion reads an implied duration above fifteen years, an extraordinary runway to assume for a building-products company whose core markets remain cyclical. Pricing a long, uninterrupted compounding story onto a business with meaningful exposure to commercial construction and capital-spending cycles is exactly how a re-rated industrial gets caught when the cycle or the AI-spending pace cools.
The balance sheet narrows the room for the story to slip. Johnson Controls carries about $9.4 billion of net debt, and against the operating income the business currently books, leverage is meaningful, even allowing for the depressed reported figure. A levered industrial whose elevated valuation depends on a backlog converting on schedule is doubly exposed: a delay in data-center power infrastructure, a softening in commercial construction, or a margin disappointment as the backlog converts would hit both the earnings and the premium multiple at once. The bear case is not that the data-center demand is fake, it is plainly real, but that the price has already paid for it to translate fully and durably into profit, when the conversion is still ahead and the macro and power-infrastructure variables that govern it are outside the company's control.
Valuation
Johnson Controls is a high case in this framework, where the price is justified mainly by the relative-multiple lens while the asset and earnings-power methods say expensive. At $144.87 the zero-growth earnings-power value is near $6, the relative-valuation method near $58, the simple excess-return method near $62, and residual income near $93; the two-stage excess-return and discounted-future-market-cap methods land closer to $100 to $106. The blended figure across the methods is near $84, well below the price, which says the stock has re-rated ahead of what most standard frames support.
The valuation is a bet on the data-center transformation playing out over a long horizon. The inversion reads an implied duration above fifteen years, meaning the price is paying for Johnson Controls to compound at above-average rates for an unusually long time. That is the most aggressive durability assumption in this batch, and it rests on the AI-driven backlog converting into sustained, high-margin growth. The record $20 billion backlog and the 30% order growth give the story real support, but the price has moved to credit a multi-year, uninterrupted version of it, and the company's own caution about power-infrastructure delays in converting that backlog is a reminder that the timeline is not guaranteed.
The leverage is part of the picture. Johnson Controls carries about $9.4 billion of net debt, which is significant against the operating income the business currently reports, even acknowledging that the reported figure understates the normalized earnings power. The dividend yields a steady return and the share count is shrinking about 3% a year, both supports for the per-share case.
Catalysts
Johnson Controls' fiscal second quarter of 2026 beat and drove a guidance raise on data-center strength. Sales rose 8% to $6.1 billion with 6% organic growth, GAAP net income from continuing operations was $609 million and adjusted net income $730 million, and orders grew 30% to lift backlog to a record $20 billion, reflecting strength in data centers and other technology-driven environments. Management raised full-year adjusted EPS guidance to approximately $4.85, implying roughly 30% growth, while holding organic sales growth near 6%, and expects about 70% of the backlog to convert to revenue within twelve months.
The catalysts from here center on backlog conversion and the data-center cycle. The key things to watch are the rate at which the record backlog turns into recognized revenue, especially given management's own flag that data-center customers' power-infrastructure delays can slow conversion, the trajectory of applied-HVAC and chiller content per data center, and the growth of the recurring service business that underpins margin. Continued order momentum would extend the visibility, while any slowdown in AI-related construction or commercial building would test it. Capital return through the dividend and steady buybacks is a supporting tailwind. The question that resolves the stock is whether the record backlog converts into sustained, high-margin earnings growth on the timeline the re-rated price assumes, or whether power-infrastructure and cyclical delays push the payoff further out than the multiple allows.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- CARR (CARRIER GLOBAL CORPORATION)
- (no filing in the citation store)
- TT (TRANE TECHNOLOGIES PLC)
- (no filing in the citation store)
- LII (LENNOX INTERNATIONAL INC)
- (no filing in the citation store)
- EMR (EMERSON ELECTRIC CO.)
- (no filing in the citation store)
- IR (Ingersoll Rand Inc.)
- (no filing in the citation store)
- DOV (DOVER Corp)
- (no filing in the citation store)
- PH (PARKER-HANNIFIN CORPORATION)
- (no filing in the citation store)
- XYL (Xylem Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Johnson Controls Q2 FY2026 earnings, PRNewswire / BigGo, May 2026 · Johnson Controls Q2 FY2026 earnings, AOL / Globe and Mail, May 2026 · Johnson Controls Q2 FY2026 earnings, PRNewswire / AOL, May 2026