JCI
Johnson Controls International plc
$156.47
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 245.0% above fair value
You pay
$156.47
Bear
$35.28
Fair
$45.36
Bull
$55.44
Bear
$35.28
-77.5%
$2.52 × 14x
Fair
$45.36
-71.0%
$2.52 × 18x
Bull
$55.44
-64.6%
$2.52 × 22x
Adjust Assumptions
18.0x
2.52$
Key Value Driver
Through-cycle normalized EPS ($2.52)
Implied Market Multiple
62.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (45 analysts)
$172.50
Divergence from AlphaVal
74%
Summary
Using 7-year normalized EPS of $2.52 at a 18x cycle multiple, the base-case value is $45.36 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 $172.50 (from 45 analysts). Our estimate is 74% 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