Johnson Controls International plc (NYSE:JCI)

The analysis of key financial performance indicators over the reported periods reveals several notable trends and fluctuations that merit attention.

Return on Assets (ROA)

The ROA exhibits significant variability throughout the periods. Starting in late 2017 through early 2018, data is not recorded; however, beginning with mid-2018, ROA ranges from approximately 4.4% to a peak of roughly 13.5% in the last quarter of 2018 and early 2019. This peak indicates a period of enhanced asset profitability. Following this, a marked decline occurs in 2020, with ROA falling to the 1.5% to 2.6% range, likely reflecting challenges during that time frame. From 2021 onwards, ROA demonstrates moderate recovery and stabilization, fluctuating between approximately 2.4% and 4.8%, suggesting modest but consistent asset earnings capability.

Financial Leverage

The financial leverage ratio shows a mild upward trend over the entire span. Initially positioned at about 2.4 times leverage in 2017 through early 2018, it decreases slightly in mid-2019 to near 2.1, representing a reduction in debt relative to equity during that brief period. Subsequently, leverage steadily rises, reaching its highest observed values around 2.7 to 2.8 times in 2023 and early 2024. This gradual increase suggests an incremental reliance on debt financing relative to equity over time.

Return on Equity (ROE)

The ROE follows a pattern broadly similar to ROA but with more pronounced peaks and troughs. It records strong performance with values exceeding 28% in late 2018 and early 2019, indicative of very high profitability relative to shareholder equity during that phase. This performance sharply declines in 2020, dipping to a low range between 3.6% and 5.9%, reflecting reduced profitability or operational challenges. From 2021 forward, ROE improves, climbing back into the range of approximately 6.5% to 12.6%, signifying a recovery phase with improving returns to equity holders, albeit not reaching earlier peak levels.

Overall, the financial ratios signify that the company experienced periods of strong asset and equity profitability around 2018-2019, followed by a significant downturn in 2020, likely related to external economic factors. Post-2020, gradual recovery is evident, complemented by increasing financial leverage that could imply strategic shifts in capital structure aiming to support growth or operational needs.

The analyzed financial metrics reveal notable trends in profitability, efficiency, and capital structure over the given periods.

Net Profit Margin (%)

The net profit margin exhibits significant fluctuations. Starting from the initial available data in December 2018, it rose steadily to peak sharply in the year ending September 2019, reaching above 23%. Subsequently, there was a sharp decline in early 2020, with margins falling to below 4% by September 2020. After this trough, the margin gradually recovered but remained moderate and somewhat volatile, fluctuating mostly between 4% and 8% through March 2024, without approaching the previous peak levels. This pattern suggests periods of unusual profitability followed by contraction and gradual stabilization at a lower profitability level.

Asset Turnover (ratio)

The asset turnover ratio shows a modest decline from late 2018 through 2020, decreasing from approximately 0.64 to around 0.53. Post-2020, the ratio stabilizes and then exhibits a slight upward trend, reaching about 0.62 by early 2024. The overall range remains narrow, indicating relatively stable efficiency in using assets to generate sales, with a temporary dip likely linked to external disruptions or operational challenges around 2019 to 2020.

Financial Leverage (ratio)

Financial leverage ratios remain consistently above 2.3, ranging mostly between 2.3 and 2.8 throughout the observed periods. There is a mild upward trend in leverage starting from around late 2020, peaking in 2023 before a small decline towards early 2024. This suggests a cautious but gradually increasing use of debt or other leverage instruments over time, with no extreme volatility observed.

Return on Equity (ROE) (%)

ROE follows a pattern similar to the net profit margin with a clear peak in the latter half of 2019, reaching nearly 29%. After this peak, ROE sharply declines during 2020 to levels around 3-5%. From 2021 onwards, there is a gradual but uneven recovery, with ROE oscillating between approximately 6.5% to 12.6%. This trend reflects the impact of the profitability cycle and leverage changes on overall shareholder returns, highlighting a recovery phase post the low points observed in 2020.

In summary, the data indicates a period of strong financial performance culminating in late 2019, followed by a marked downturn in 2020 likely associated with challenging external factors. Since then, the company has shown signs of recovery across profitability, asset utilization, and return metrics, alongside a steady approach towards leverage. The fluctuations in net profit margin and ROE suggest sensitivity to market or operational conditions, while the relatively stable asset turnover and moderate increase in leverage indicate controlled operational and financial management during the recent recovery phase.

Net Profit Margin

The net profit margin demonstrates significant fluctuations throughout the observed periods. Initially, values were not recorded but from late 2017 onward, the margin generally ranged between 4% and 8%. A notable peak occurred in late 2018 and early 2019, where the margin reached above 20%, indicating a period of exceptional profitability. This spike was followed by a marked decrease from early to late 2020, where margins dipped to below 3%, suggesting challenges impacting profitability. Subsequently, from 2021 onward, the margin stabilized mostly between 4% and 8%, with some quarterly variations but without returning to the earlier peak levels.

Asset Turnover

The asset turnover ratio remained relatively stable across the periods, hovering primarily between 0.53 and 0.64. Early data shows a slight decline from 0.64 in late 2017 to approximately 0.55 by late 2020, indicating a minor reduction in the efficiency of asset use. However, from 2021 to early 2024, the ratio shows a gradual increase, reaching around 0.62 by the latest periods, suggesting a modest improvement in how effectively assets are generating revenue.

Return on Assets (ROA)

The return on assets follows a pattern somewhat aligned with net profit margin trends but with subdued intensity. Initially absent from the data, ROA rises steadily to a high near 13.5% in late 2018 and early 2019, reflecting strong profitability relative to assets. After this peak, a significant decline is observed in 2020, dropping below 2.5%, indicating diminished returns possibly due to operational or market challenges. From 2021 onwards, the ROA gradually recovers, achieving values mostly between 3% and 5%, signaling a partial restoration of asset efficiency in generating profits, yet it remains well below the peak levels of 2018-2019.

Summary

Overall, the financial ratios indicate a phase of strong profitability and asset efficiency around late 2018 to early 2019, followed by a notable downturn coinciding with 2020, likely reflecting external or internal disruptions. The subsequent recovery phase shows stabilization and moderate improvements in profitability margins and asset utilization, though performance metrics have not returned to the previous peak levels. The trends suggest resilience with cautious improvement in operational effectiveness over the recent periods.