Johnson Controls International PLC (JCI)

Conclusion

Johnson Controls International, based in Cork, Ireland, designs, installs and services heating, ventilation and air conditioning, building controls, fire detection and security systems for commercial, institutional, industrial and data center customers. At 141.49 USD on 9 November 2026, the market capitalisation is 85.7 billion USD and the enterprise value is 93.3 billion USD.

The verdict is overvalued. Today's price-to-earnings ratio is 30.0, against a ten-year median of 31.3, and the enterprise value to EBITDA ratio is 22.9, against a median of 20.3. The discounted cash flow gives 59.84 USD per share at a discount rate of 11.3%. The fair value band runs from 73.54 to 110.31 USD with a midpoint of 91.92 USD, a margin of safety of -35.0% at the current price. The reverse DCF implies growth of 14.4% a year, far above the 1.6% revenue CAGR of the last five years. Per-share growth has been much stronger, with EPS growing 15.5% and free cash flow per share 15.1% a year over five years, so the price relies on per-share growth continuing.

Three numbers support the case. Return on invested capital is 13.6% against a weighted cost of capital of 10.8%. Free cash flow conversion over the last twelve months is 116.0%, and the company beat earnings estimates in all eight of the last quarters. Net debt to EBITDA of 1.9x is assessed as good. Three numbers weaken it. The current ratio is 0.77, assessed as bad. The price-to-book ratio is 6.30, against a ten-year median of 2.50. Five-year revenue growth is only 1.6%.

Financial health

Financial strength is yellow: net debt to EBITDA of 1.9x is assessed good, but the current ratio of 0.77 is assessed bad. The quick ratio is 0.61 and debt to equity is 0.60. Interest coverage is not available because the company does not report its interest expense. The Altman Z-score is not available because the inputs it needs are missing. The Altman model was designed for manufacturers, and the company is partly one. Insolvency risk is low, about 0.9% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, with free cash flow conversion, buybacks and earnings surprises all supporting it. Free cash flow conversion is 116.0% over the last twelve months and 79.7% over five years. The accrual ratio is -2.4%, which means cash earnings exceed reported earnings. Stock-based compensation is 0.5% of revenue, and free cash flow after it is 3.19 billion USD. The share count fell 3.3% a year over five years, which points to buybacks. The Piotroski score is 6 of 8 evaluable criteria. The Beneish M-score is not available. The company beat earnings estimates in all eight of the last quarters, by 5.6% on average. Estimates for the current year rose 6.0% over 90 days, and estimates for next year rose 5.9%.

Profitability

Profitability is green, led by a return on capital above its cost. Gross margin is 37.1% against a ten-year median of 34.2%, operating margin is 14.4% against 10.5%, and net margin is 11.1% against 7.4%. Return on invested capital is 13.6% against a weighted cost of capital of 10.8%, and the given gap between them is 2.8%. The five-year median return on invested capital is 6.7%, so returns have improved. Return on equity is 21.0%, but leverage supplies much of it. The DuPont split shows a net margin of 11.1%, an asset turnover of 0.64 and an equity multiplier of 2.95. Operating margin stability is 22.1%.

Growth

Growth is green, driven by per-share growth. Revenue compound growth is 4.8% over three years, 1.6% over five years and 2.1% over ten years. Revenue grew in 7 of 10 comparable years. Earnings per share compound at 19.7% over three years and 15.5% over five years. Free cash flow per share compounds at 29.8% over three years, 15.1% over five years and 18.9% over ten years. The gap between revenue and per-share growth is consistent with the buybacks shown in the share count. Analysts expect earnings per share to grow 17.2% next year.

Valuation

Valuation is red, because the price is above the fair value band on every main measure. The price-to-earnings ratio of 30.0 sits 3.9% below its ten-year median of 31.3. The enterprise value to EBITDA ratio of 22.9 is a 12.8% premium to its median of 20.3. The price-to-free-cash-flow ratio of 25.9 is an 11.3% discount to its median of 29.2. The price-to-sales ratio of 3.34 is a 74.4% premium, and the price-to-book ratio of 6.30 is a 152.3% premium. The discounted cash flow gives 59.84 USD per share, at a discount rate of 11.3%, terminal growth of 2.5%, and a terminal value share of 43.6%. The fair value band runs from 73.54 to 110.31 USD, with a midpoint of 91.92 USD and a margin of safety of -35.0%. The fair value from historical multiples is 124.01 USD. These are estimates built on fixed assumptions, not a price target. The dividend yield is 1.1%, and the dividend takes 29.5% of free cash flow.

Risks

A current ratio of 0.77 means short-term obligations exceed current assets, so the company depends on steady cash flow and access to credit to meet them. A price-to-book ratio of 6.30 leaves little room for error if returns on equity fall. Five-year revenue growth of 1.6% makes the reverse DCF's implied growth of 14.4% hard to reach without strong per-share gains. Because the terminal value accounts for 43.6% of the discounted cash flow value, the result depends heavily on long-term assumptions. The company does not report its interest expense, so the cost of debt of 6.9% is an assumption, and interest coverage and the Altman Z-score cannot be calculated. The Beneish M-score is not available. This analysis has no debt maturity schedule and no revenue by segment, so it cannot judge refinancing timing or which businesses drive growth.