Wednesday, November 5, 2014

Why Has Johnson Controls Slumped This Year?

Investors in Johnson Controls  have watched their stock decline by nearly 14% this year, even as the company has outperformed expectations in one of its three segments (automotive experience) and made a host of initiatives to improve productivity. With that said, you might be wondering just why the company has declined in 2014. Let's take a look.




Source: Johnson Controls



Great Expectations
No, not a treatise on Charles Dickens, but a lead-in to what has happened this year with the company. Simply put, at the start of the year, investors had expected positive things from its three segments:

  • Power solutions (automotive batteries) was expected to have a strong winter thanks to severe cold weather in North America.
  • The building efficiency (heating, ventilation, and air-conditioning, or HVAC) segment was expected to see a pickup in demand from a long-anticipated improvement in North American construction activity.
  • Automotive experience (car seating and interiors) looked set to have a good year as North America and China automotive sales and production looked likely to remain in growth mode.

Fast-forward to what actually happened, and it's a mixed story.


READ THE FULL EQUITY RESEARCH ARTICLE LINKED HERE