Stock Analysis on Net
Stock Analysis on Net

Johnson Controls International plc (NYSE:JCI)

This company has been moved to the archive! The financial data has not been updated since May 1, 2024.

Dividend Discount Model (DDM)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.

Intrinsic Stock Value (Valuation Summary)

Johnson Controls International plc, dividends per share (DPS) forecast

US$

Microsoft Excel
Year Value DPSt or Terminal value (TVt) Calculation Present value at 16.15%
0 DPS01 1.45
1 DPS1 1.52 = 1.45 × (1 + 4.62%) 1.31
2 DPS2 1.62 = 1.52 × (1 + 6.82%) 1.20
3 DPS3 1.77 = 1.62 × (1 + 9.03%) 1.13
4 DPS4 1.97 = 1.77 × (1 + 11.23%) 1.08
5 DPS5 2.23 = 1.97 × (1 + 13.43%) 1.05
5 Terminal value (TV5) 92.96 = 2.23 × (1 + 13.43%) ÷ (16.15% – 13.43%) 43.97
Intrinsic value of Johnson Controls International plc common stock (per share) $49.74
Current share price $60.47

Based on: 10-K (reporting date: 2023-09-30).

1 DPS0 = Sum of the last year dividends per share of Johnson Controls International plc common stock. See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 3.99%
Expected rate of return on market portfolio2 E(RM) 13.81%
Systematic risk of Johnson Controls International plc common stock βJCI 1.24
 
Required rate of return on Johnson Controls International plc common stock3 rJCI 16.15%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rJCI = RF + βJCI [E(RM) – RF]
= 3.99% + 1.24 [13.81% – 3.99%]
= 16.15%

Dividend Growth Rate (g)

Dividend growth rate (g) implied by PRAT model

Johnson Controls International plc, PRAT model

Microsoft Excel
Average Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020 Sep 30, 2019 Sep 30, 2018
Selected Financial Data (US$ in millions)
Cash dividends declared 991 965 771 780 887 968
Net income attributable to Johnson Controls 1,849 1,532 1,637 631 5,674 2,162
Net sales 26,793 25,299 23,668 22,317 23,968 31,400
Total assets 42,242 42,158 41,890 40,815 42,287 48,797
Shareholders’ equity attributable to Johnson Controls 16,545 16,268 17,562 17,447 19,766 21,164
Financial Ratios
Retention rate1 0.46 0.37 0.53 -0.24 0.84 0.55
Profit margin2 6.90% 6.06% 6.92% 2.83% 23.67% 6.89%
Asset turnover3 0.63 0.60 0.57 0.55 0.57 0.64
Financial leverage4 2.55 2.59 2.39 2.34 2.14 2.31
Averages
Retention rate 0.55
Profit margin 5.92%
Asset turnover 0.59
Financial leverage 2.39
 
Dividend growth rate (g)5 4.62%

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).

2023 Calculations

1 Retention rate = (Net income attributable to Johnson Controls – Cash dividends declared) ÷ Net income attributable to Johnson Controls
= (1,849 – 991) ÷ 1,849
= 0.46

2 Profit margin = 100 × Net income attributable to Johnson Controls ÷ Net sales
= 100 × 1,849 ÷ 26,793
= 6.90%

3 Asset turnover = Net sales ÷ Total assets
= 26,793 ÷ 42,242
= 0.63

4 Financial leverage = Total assets ÷ Shareholders’ equity attributable to Johnson Controls
= 42,242 ÷ 16,545
= 2.55

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.55 × 5.92% × 0.59 × 2.39
= 4.62%

Dividend growth rate (g) implied by Gordon growth model

g = 100 × (P0 × r – D0) ÷ (P0 + D0)
= 100 × ($60.47 × 16.15% – $1.45) ÷ ($60.47 + $1.45)
= 13.43%

where:
P0 = current price of share of Johnson Controls International plc common stock
D0 = the last year dividends per share of Johnson Controls International plc common stock
r = required rate of return on Johnson Controls International plc common stock

Dividend growth rate (g) forecast

Johnson Controls International plc, H-model

Microsoft Excel
Year Value gt
1 g1 4.62%
2 g2 6.82%
3 g3 9.03%
4 g4 11.23%
5 and thereafter g5 13.43%

where:
g1 is implied by PRAT model
g5 is implied by Gordon growth model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 4.62% + (13.43% – 4.62%) × (2 – 1) ÷ (5 – 1)
= 6.82%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 4.62% + (13.43% – 4.62%) × (3 – 1) ÷ (5 – 1)
= 9.03%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 4.62% + (13.43% – 4.62%) × (4 – 1) ÷ (5 – 1)
= 11.23%