Johnson Controls Exhibits Strong Prospects Despite Persisting Headwinds

Johnson Controls International plc JCI is benefiting from solid momentum across all segments. Increase in demand for heating, ventilation and air conditioning (HVAC) platforms in data centers and strength in controls businesses are driving the Americas segment. Strength in service, fire and security, and applied HVAC businesses is aiding the Europe, the Middle East, and Africa (EMEA) segment. The Asia-Pacific (APAC) segment’s performance is being driven by solid momentum in the service business. Strength in the products and systems business also bodes well.

The company solidified its product portfolio and leveraged business opportunities through asset additions. In fiscal 2025 (ended September 2025), acquisitions increased Johnson Controls’ revenues by $25 million. The acquisition of digital workplace management and Internet of Things (IoT) solutions provider, FM:Systems, in July 2023 expanded OpenBlue’s digital buildings offerings, adding cloud-based software as a service (SaaS) digital workplace management capability.

JCI’s commitment to rewarding shareholders through dividends and share buybacks is encouraging. In fiscal 2025, Johnson Controls paid a dividend worth $976 million to its shareholders. The company also repurchased shares worth $5.99 billion in the same period. The company hiked its quarterly dividend by 8% to 40 cents per share in September 2025. At the end of fiscal 2025, Johnson Controls had $4.75 billion remaining under this program.

JCI’s Zacks Rank

In the past six months, this Zacks Rank #3 (Hold) company’s shares gained 15.1% compared with the industry’s 3.0% growth.

However, high costs pose a threat to the company’s bottom line. In the fiscal fourth quarter of 2025, its selling, general and administrative expenses increased 11.2% year over year. The company continues to incur significant selling, general and administrative (SG&A) expenses tied to organizational realignment and higher transaction/separation costs. Additionally, JCI has been experiencing higher corporate costs related to increased IT investments and cybersecurity enhancement expenses. While these investments are intended to strengthen long-term efficiency, high costs and expenses will negatively impact the company’s short-term profitability.

Johnson Controls’ wide exposure to global markets makes it more vulnerable to forex woes. This is because a strengthening U.S. dollar may require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry for the company. Adverse foreign currency translations lowered the Americas segment’s sales by $34 million in fiscal 2025.

Stocks to Consider

Some better-ranked companies are discussed below:

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In the past 60 days, the consensus estimate for Rayonier’s 2025 earnings has increased 23.7%.

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In the past 60 days, the consensus estimate for Watts Water’s 2025 earnings has increased 4.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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