JCI
Johnson Controls International plc
$142.81
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 93.9% above fair value
You pay
$142.81
Bear
$54.02
Fair
$73.66
Bull
$93.30
Bear
$54.02
-62.2%
$2.52 × 14x + net cash
Fair
$73.66
-48.4%
$2.52 × 18x + net cash
Bull
$93.30
-34.7%
$2.52 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.52)
Implied Market Multiple
56.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $157.33 from 45 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $73.66 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $157.33 (from 45 analysts). Our estimate is 76% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing