Johnson Controls International plc (NYSE:JCI)

Market (fair) value of Johnson Controls

The market value experienced moderate fluctuations from 2018 through 2020, ranging between approximately $42 billion and $44 billion. In 2021, there was a significant increase to approximately $66 billion, followed by a considerable decline to around $56 billion in 2022, and a further decline to about $47 billion in 2023. This indicates a peak in market valuation in 2021 with a subsequent downward correction over the following two years.

Invested capital

Invested capital showed a general decreasing trend from 2018 to 2020, dropping from roughly $35 billion to about $29 billion. From 2020 to 2023, the invested capital remained relatively stable, fluctuating narrowly between approximately $29 billion and $29.5 billion, indicating a plateau in capital investment during this recent period.

Market value added (MVA)

Market value added (MVA), representing the excess of market value over invested capital, showed a rising trend from 2018 through 2021, increasing from approximately $8.9 billion to a peak of $36.9 billion in 2021. However, this value declined markedly in subsequent years to about $26.5 billion in 2022 and further to $17.8 billion in 2023. This pattern suggests the company achieved significant value creation relative to invested capital until 2021, after which market perception of added value decreased notably.

Market Value Added (MVA)

There is a positive trend in Market Value Added from 2018 to 2021, with figures increasing significantly from 8,940 million US dollars to a peak of 36,905 million in 2021. However, after this peak, there is a noticeable decline in MVA over the next two years, dropping to 26,471 million in 2022 and further down to 17,798 million in 2023. The trend indicates substantial growth through 2021, followed by a reduction, although the MVA remains higher than the values prior to 2021.

Invested Capital

The Invested Capital exhibits a gradual downward trend from 2018 to 2020, decreasing from 35,173 million US dollars to 29,283 million. From 2020 onwards, the invested capital stabilizes somewhat, fluctuating narrowly around the 29,300 million mark through to 2023. This stabilization suggests a period of relatively stable investment after initial reductions.

MVA Spread Ratio

The MVA Spread Ratio shows a steady increase from 25.42% in 2018 to a significant high of 125.79% in 2021, indicating a growing return spread relative to invested capital during this period. Post-2021, there is a marked reduction in the ratio, decreasing to 89.74% in 2022 and further down to 60.41% in 2023. Despite the decline, the ratio remains elevated relative to the 2018 and 2019 figures, reflecting maintained improvements in value creation efficiency compared to the initial years.

Overall Summary

The data reveals strong value creation from 2018 through 2021, with significant increases in both market value added and the MVA spread ratio while invested capital decreased initially and then stabilized. Following the peak in 2021, both MVA and the MVA spread ratio show a declining trend through 2023, although remaining above early-period levels. This pattern suggests a period of enhanced efficiency and value generation culminating in 2021, followed by some degree of contraction or market adjustment in the subsequent years.

The financial data reveals notable fluctuations in the company's market value added (MVA), adjusted net sales, and MVA margin over the reviewed six-year period from 2018 to 2023.

Market Value Added (MVA)

The MVA shows a generally increasing trend from 2018 through 2021, rising from $8,940 million in 2018 to a peak of $36,905 million in 2021. Subsequently, there is a marked decline over the next two years, dropping significantly to $26,471 million in 2022 and further to $17,798 million in 2023. This peak followed by a steep decrease suggests a period of substantial value creation followed by value erosion or market reevaluation.

Adjusted Net Sales

Adjusted net sales declined sharply from $31,447 million in 2018 to $22,345 million in 2020, which may indicate challenges affecting revenue generation during this period. After 2020, sales figures show a recovery and modest growth, climbing steadily to $26,985 million in 2023. This recovery trajectory hints at a possible stabilization and expansion phase post-2020.

MVA Margin

The MVA margin percentage experienced considerable variability, starting at 28.43% in 2018 and increasing to a very high 154.61% in 2021, suggesting highly efficient value creation relative to sales during that year. However, this margin decreased substantially to 104.09% in 2022 and then to 65.96% in 2023, indicating reduced efficiency or profitability relative to net sales after the peak period.

In summary, the data suggests a period of strong market value growth and unusually high MVA margin efficiency around 2021, accompanied by a rebound in adjusted net sales after a dip. This phase is followed by a correction in market value metrics and a more moderate margin level, pointing to shifting market conditions or operational performance changes in the most recent years.