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