Johnson Controls International JCI
Basic Materials · Construction Materials · Synthos Deep Dive · 2026-08-04
The Overview
Johnson Controls makes the systems that keep large buildings working: air conditioning and chillers, fire alarms and sprinklers, security, and the software that runs them. Its customers are offices, hospitals, universities, factories and — increasingly — data centres.
For years it was a sprawling, underperforming company. In 2025 it hired a new chief executive from outside. Since then it has sold its home air-conditioning business to Bosch, agreed to sell its British home-security business, reorganised itself from four divisions into three, and started beating analysts' profit forecasts — five quarters in a row, and by a bigger margin each time: 4%, 5%, 5.8%, 6.3% and, most recently, 9.2%.
The board has also put in place an unusual pay scheme. Executives get share options that are worth nothing at all unless the company hits both a large sales target and a market-value target described as "a substantial increase from the Company's current market capitalization" — over five years, forfeited entirely if they leave for almost any reason. Management is being paid to roughly transform the company, or paid nothing.
The market likes it. The shares rose 4.93% today and closed at $153.62 — which is the highest price they have reached in a year. Over twelve months they are up 44%, roughly double the market. Remarkably, the vendor data shows the shares have not had a single meaningful setback all year.
That is the problem. Analysts on average think the shares are worth $157.33. The median analyst thinks $154.00. They cost $153.62. Our own estimate is $160. Nobody — including us — thinks there is much left.
Three things to understand before deciding.
The huge buyback was not paid for by the business. Last year Johnson Controls bought back $5.99 billion of its own stock, about 6% of the company. But it only generated $965 million of spare cash. The difference came from selling the home air-conditioning business to Bosch. That money is now spent, and net debt is $10.8 billion.
There is no asset backing. Of the company's $12.9 billion of book value, $20.2 billion is goodwill and intangibles — accounting entries from past acquisitions. Strip them out and the tangible book value is negative $7.3 billion.
And the company keeps changing shape, which makes its own history hard to read. Four divisions became three in April. One business was sold, another is being sold. The supplied financial data still shows the old structure.
A real improvement, honestly earned, at a price that has already paid for it. That is a Hold. Our number is $125.
One note on our own research: the Synthos knowledge base holds 51,928 recorded expert claims and not one mentions this company — including in the large body of commentary it does hold about data-centre construction, where Johnson Controls supplies the cooling.
- Downside Risk 7/10. A good turnaround at the worst entry in this batch, over negative tangible equity.
- Growth Quality 6/10. Accelerating beats, modest revenue, and a margin-dependent forecast.
- Exponential Potential 4/10. A real data-centre thermal-management exposure the company has not sized.
Putting a number on it: our fair-value estimate is $160 against a current price of $139.59 — real upside if our numbers are right.
Our summary metrics
"Rated 7 — a genuine turnaround at the single worst entry point in this batch, over a balance sheet with no tangible equity. The supports: five consecutive earnings beats of ACCELERATING size (4.0%, 5.0%, 5.8%, 6.3%, 9.2%); June-quarter revenue up 9.3% to $6,614M; a new chief executive appointed from outside the company who has realigned the segment structure, completed one divestiture and signed another; and a Value Growth Incentive Program adopted 2026-05-11 that ties executive options to a net-sales goal and a market-capitalisation goal explicitly 'representing a substantial increase from the Company's current market capitalization', with forfeiture on any termination other than death, disability or a qualifying termination. That is unusually direct alignment. Against it, five risks. FIRST, the entry: the stock closed AT its 52-week high of $153.62, up 4.93% on the day, 48.4% above its low, with a maximum drawdown from peak over the entire trailing year of EXACTLY ZERO and an RSI of 70.8. SECOND, tangible equity is NEGATIVE $7,319 million — goodwill of $16,633M plus intangibles of $3,613M against total equity of $12,927M — so there is no asset backing beneath the multiple. THIRD, the capital return is not self-funded: fiscal-2025 free cash flow was $965M against $5,991M of share repurchase, the difference being proceeds from the July 2025 sale of the residential and light commercial HVAC business to the Bosch Group, and that source is now spent. FOURTH, net debt is $10,811M against roughly $3.2 billion of fiscal-2025 EBITDA. FIFTH, the disclosure has been restructured twice in two years — a four-to-three segment realignment on 2026-04-01 with history recast, plus a discontinued operation and a pending held-for-sale business — which makes every historical comparison in the payload unreliable."
"Rated 6 — modest at the group level, accelerating at the margin, and difficult to measure because the company keeps changing shape. Revenue: $20,637M (FY2022), $22,331M (FY2023), $22,952M (FY2024), $23,596M (FY2025) — 8.2%, 2.8%, 2.8% — on a September fiscal year, with the FY2025 figure already excluding the divested residential HVAC business as a discontinued operation. The recent trajectory is better: the June 2026 quarter delivered $6,614M against $6,052M, UP 9.3%, and the four most recent quarters run $6,442M, $5,797M, $6,142M, $6,614M. Adjusted EPS from the `earn_cal` actuals is $1.05, $1.26, $0.89, $1.19 and $1.42 across five quarters — a trailing $4.76 — with beats of 4.0%, 5.0%, 5.8%, 6.3% and 9.2%. FIVE CONSECUTIVE BEATS, AND THE MARGIN OF THE BEAT HAS RISEN EVERY QUARTER. That pattern — accelerating positive surprise under a new chief executive — is the single most encouraging series in this file and it is what the share price has been responding to. Consensus wants $5.008 in FY2026 (8 analysts), $5.936 in FY2027 (12) and $6.963 in FY2028 (6) — 18.5% then 17.3% — on revenue growing 8.0% and 7.6%. What holds this at 6 rather than 7: the earnings growth is forecast at more than twice the revenue growth, so it is a margin forecast; and the company's own description of its markets — 'data centers, healthcare, pharmaceuticals, advanced manufacturing, and higher education' — is a growth story whose quantification is not available anywhere in this archive, because the JCI filings contain no preserved statement tables."
"Rated 4 — one genuinely favourable structural exposure inside a building-products company. The 10-Q describes Johnson Controls as 'a global leader in thermal management, mission-critical building systems, energy efficiency, and decarbonization' helping customers 'create, maintain, and optimize indoor operating environments that use energy more productively, reduce carbon emissions, and support the precise, reliable and resilient operating conditions in rapidly expanding industries such as DATA CENTERS, healthcare, pharmaceuticals, advanced manufacturing, and higher education.' That first named market is the interesting one. Artificial-intelligence data centres are constrained as much by cooling and power distribution as by silicon, and thermal management at that scale is a specification-driven business with long qualification cycles and high switching costs — the same characteristics that make building controls sticky, applied to a market growing far faster than commercial construction. The sale of the residential and light commercial HVAC business to Bosch in July 2025 was a deliberate move away from the cyclical, price-competitive end of the same industry toward this one. Against that: this is still a company that sells chillers, fire-suppression systems, security equipment and building controls into construction and retrofit cycles; group revenue grew 2.8% in each of the last two fiscal years; and the data-centre exposure is described qualitatively in a single sentence and quantified nowhere in this archive. A 4: a real and well-positioned structural exposure that the company has not yet sized for its shareholders."
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
The Road Ahead
What we expect to matter in each window, and the evidence that would prove us wrong.
Short term 0-6 months
Neutral- Driver
- "The single worst entry point in this batch, on the best short-term operating news in it. Johnson Controls closed 2026-08-04 at $153.62, UP 4.93% or $7.23, and that closing price IS the 52-week high — `tech.pct_from_hi` reads 0.0 and `tech.max_dd_from_peak` reads 0.0, meaning the stock has not experienced a single peak-to-trough decline over the entire trailing year as measured from its running high. It is 48.4% above its 52-week low of $103.52, 7.7% above a 50-day average of $142.67 and 17.2% above a 200-day average of $131.11. RSI is 70.8, the second-highest in this batch. Twelve-month return is +44.3% against SPY's +24.3%; six-month +24.9% against +11.1%; three-month +6.4% against +7.6% — note that the three-month figure LAGS the market, so most of the outperformance is six to twelve months old and today's move is a fresh breakout rather than the continuation of a steady climb. The fundamental news is six days old and genuinely good: a 9.2% earnings beat, the fifth consecutive and the largest of them. What makes the stance neutral rather than a tailwind is that the vendor's consensus target is $157.33, 2.4% above spot, and its MEDIAN is $154.00 — twenty-two basis points above the closing price."
- What we’re watching
- "The 2026-11-04 print, which is the fourth-quarter and full-year fiscal-2026 report, against consensus adjusted EPS of $1.55 and revenue of $7,003M — implying 9.2% sequential EPS growth on the June quarter's $1.42. Within it: whether the beat streak reaches six, and whether the margin of the beat keeps expanding (4.0%, 5.0%, 5.8%, 6.3%, 9.2% across the last five); the first full-year figures under the three-segment structure adopted 2026-04-01, which will be the first clean comparison the new organisation produces; free cash flow, which was $965M in fiscal 2025 against $1,604M in fiscal 2024 and $1,775M in fiscal 2023 — the deterioration matters because the buyback is no longer funded by divestiture proceeds; and any quantification of the data-centre exposure the company names first among its markets but has not sized. Separately: progress on the ADT United Kingdom residential security divestiture, signed in the third fiscal quarter with $229M of assets and $39M of liabilities held for sale and expected to close in fiscal 2027."
- Confidence
- Low
Medium term 6-24 months
Tailwind- Driver
- "The medium term is where the turnaround thesis lives and it is coherent. Consensus has adjusted EPS at $5.008 in fiscal 2026, $5.936 in fiscal 2027 and $6.963 in fiscal 2028 — 18.5% then 17.3% — on revenue growing 8.0% and 7.6% from a fiscal-2025 base of $23,596M. That is earnings growing at more than twice revenue, which is a margin forecast, and there is a specific reason to believe it: a chief executive appointed from outside the company has realigned four reportable segments into three (Americas, EMEA and APAC, effective 2026-04-01, with history recast), completed the exit from residential and light commercial HVAC through the July 2025 sale to the Bosch Group, and signed the ADT United Kingdom residential security business for sale. That is a portfolio being simplified toward higher-margin commercial and institutional work. The alignment is unusually explicit: the Value Growth Incentive Program adopted 2026-05-11 grants performance options over fiscal 2026 to fiscal 2030 that vest only on achieving a net-sales goal 'representing significant growth' AND a market-capitalisation goal 'representing a substantial increase from the Company's current market capitalization', forfeited entirely on retirement or involuntary termination. Management is paid to double the company or get nothing."
- What we’re watching
- "Whether free cash flow recovers. Fiscal-2025 free cash flow of $965M against fiscal 2024's $1,604M and fiscal 2023's $1,775M is a 46% decline over two years, and the $5,991M fiscal-2025 buyback was funded by the Bosch proceeds rather than by operations. With that source spent, the capital return must come from the business or from the balance sheet, and net debt is already $10,811M. Whether the margin expansion the FY2027 consensus requires actually appears; the June quarter's operating income of $987M on $6,614M of revenue is 14.9%, against 14.1% in the year-ago quarter. Whether the three-segment realignment produces disclosure that lets shareholders see where the growth is — the payload's `seg_prod` still shows the OLD four-segment structure for fiscal 2024 and a three-line variant for fiscal 2025 that does not match the new Americas/EMEA/APAC names. Whether the data-centre exposure is ever quantified. Whether the ADT UK divestiture closes in fiscal 2027 as expected. And whether the Value Growth Incentive Program's market-capitalisation trigger creates the right incentives or merely an expensive option package — the filing states the options 'will therefore have value only to the extent the Company's share price increases after the grant date', which is correct and is also a dilution item."
- Confidence
- Medium
Long term 2+ years
Neutral- Driver
- "Long-run, Johnson Controls is a building-systems company: chillers, air handling, fire detection and suppression, security, and the controls software that ties them together, sold into commercial, institutional and industrial buildings across roughly 87,000 employees, headquartered in Cork, Ireland. The durable characteristics are good — specification-driven products with long qualification cycles, a large installed base generating recurring service revenue, and a decarbonisation and energy-efficiency retrofit cycle that is regulatory as much as economic. The company has spent the last two years narrowing toward that: out of residential HVAC, out of United Kingdom residential security, into a three-region structure. And it has named its target markets explicitly — 'data centers, healthcare, pharmaceuticals, advanced manufacturing, and higher education' — the first of which is expanding faster than any building category in a generation and is constrained by exactly the thermal-management capability this company sells. Against that: group revenue grew 2.8% in each of the last two fiscal years; the balance sheet carries $20,246M of goodwill and intangibles against $12,927M of equity, so two decades of acquisition are the book value; and the earnings forecast rests on margin expansion under a chief executive whose track record at this company is five quarters long. Joakim Weidemanis became chief executive in 2025."
- What we’re watching
- "Whether the data-centre thermal-management opportunity is real at the scale the sector's capital expenditure implies, and whether Johnson Controls captures it — the company names it first among its markets and quantifies it nowhere. Whether the new chief executive's simplification produces a durable margin step or a one-off. Whether the goodwill holds: $16,633M of goodwill on $12,927M of equity means a meaningful impairment would erase book value entirely, and the company has already restructured its segments twice, which is when goodwill gets retested. Whether the service and recurring-revenue base grows as a share of the whole, which is the difference between a building-products manufacturer and a building-systems platform. Whether the Irish domicile remains tax-advantaged through changes to international corporate tax rules. Whether the Value Growth Incentive Program's five-year market-capitalisation target is achieved, missed, or reset — a compensation scheme that pays nothing unless the company roughly transforms is a strong signal on the way up and a governance problem if the board later softens it. And whether free cash flow ever returns to the $1.7-1.8 billion of fiscal 2023."
- Confidence
- Low
Exponential Potential
"Rated 4 — one genuinely favourable structural exposure inside a building-products company. The 10-Q describes Johnson Controls as 'a global leader in thermal management, mission-critical building systems, energy efficiency, and decarbonization' helping customers 'create, maintain, and optimize indoor operating environments that use energy more productively, reduce carbon emissions, and support the precise, reliable and resilient operating conditions in rapidly expanding industries such as DATA CENTERS, healthcare, pharmaceuticals, advanced manufacturing, and higher education.' That first named market is the interesting one. Artificial-intelligence data centres are constrained as much by cooling and power distribution as by silicon, and thermal management at that scale is a specification-driven business with long qualification cycles and high switching costs — the same characteristics that make building controls sticky, applied to a market growing far faster than commercial construction. The sale of the residential and light commercial HVAC business to Bosch in July 2025 was a deliberate move away from the cyclical, price-competitive end of the same industry toward this one. Against that: this is still a company that sells chillers, fire-suppression systems, security equipment and building controls into construction and retrofit cycles; group revenue grew 2.8% in each of the last two fiscal years; and the data-centre exposure is described qualitatively in a single sentence and quantified nowhere in this archive. A 4: a real and well-positioned structural exposure that the company has not yet sized for its shareholders."
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $157.33 (+2.4%) · median $154.00 (+0.25%) · high $180 (+17.2%) · low $130 (−15.4%) · 0 strong buy / 28 buy / 17 hold / 0 sell across 45 analysts |
| Valuation | 32.3x trailing adjusted EPS ($4.76) · 30.7x FY2026E $5.008 · 25.9x FY2027E $5.936 · 22.1x FY2028E $6.963 · 7.2x book · tangible book is NEGATIVE |
| The June quarter (reported 2026-07-29) | Revenue $6,614M, +9.3% year on year · operating income $987M, 14.9% margin vs 13.7% · adjusted EPS $1.42 vs $1.30, +9.2% — the fifth consecutive beat and the largest of the five |
| The beat streak, and it is accelerating | +4.0% → +5.0% → +5.8% → +6.3% → +9.2% across the last five quarters |
| Corporate actions the payload does not reflect | Four reportable segments realigned to THREE (Americas, EMEA, APAC) effective 2026-04-01, history recast · residential and light commercial HVAC sold to the Bosch Group, completed July 2025, treated as discontinued operations · ADT United Kingdom Residential Security signed for sale in Q3 FY2026, $229M assets and $39M liabilities held for sale, expected to close fiscal 2027 · Value Growth Incentive Program adopted 2026-05-11 |
| Capital return, and where it came from | Fiscal-2025 buyback $5,991M — 6.4% of market capitalisation · dividend $1.60, 1.04% yield · but fiscal-2025 free cash flow was $965M. The buyback was funded by the Bosch divestiture proceeds, and that source is spent |
| Balance sheet | Net debt $10,811M · goodwill $16,633M + intangibles $3,613M = $20,246M against $12,927M of equity → tangible equity NEGATIVE $7,319M |
| Conviction | NONE. 0 raw KB hits — zero entity matches AND zero free-text hits. The second completely null sweep in this batch alongside CSX |
| Technicals | 0.0% from the 52-week high — the price IS the high ($153.62); +48.4% above the low of $103.52; +7.7% above the 50-DMA ($142.67), +17.2% above the 200-DMA ($131.11); RSI 70.8; MACD +1.31; max drawdown 0.0%; 12-month +44.3% vs SPY +24.3% |
What the experts actually said
No independent expert claims in the Synthos knowledge base yet for JCI — this dive is fundamentals- and technicals-driven, not panel-driven.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $139.59, 4% below the 50-day average ($145), 4% above the 200-day average ($134) — a mixed trend. 10% below the 52-week high of $155, 33% above the 52-week low of $105.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $139.59 is currently inside the band (band $138–$159).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 38.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently below its signal line by 1.33, negative momentum.
Relative performance vs S&P 500 & its sector (XLB (sector)), set to 100 a year ago
Solid = JCI · dashed = S&P 500 · dotted = XLB (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. The company, and it has been reshaped twice
Johnson Controls International plc is an Irish public limited company headquartered in Cork, NYSE-listed, with approximately 87,000 employees and Joakim Weidemanis, appointed from outside the company in 2025, as chief executive. The 10-Q's own description of what it is:
> "Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in thermal management, mission-critical building systems, energy efficiency, and decarbonization. The Company helps customers create, maintain, and optimize indoor operating environments that use energy more productively, reduce carbon emissions, and support the precise, reliable and resilient operating conditions in rapidly expanding industries such as data centers, healthcare, pharmaceuticals, advanced manufacturing, and higher education."
Note the market it names first. That single sentence is the entire disclosed basis for the structural growth case, and it is qualitative — no data-centre revenue figure appears anywhere in this archive.
The structure has changed twice in two years, and the vendor payload has not kept up:
> "On April 1, 2025, the Company realigned into three reportable segments (Americas, EMEA and APAC) from four reportable segments (Global Products, Building Solutions North America, Building Solutions EMEA/LA and Building Solutions APAC). Historical information has been recast to present the comparative periods on a consistent basis."
The payload's seg_prod uses NEITHER structure correctly. For fiscal 2024 it reports the old four segments — Building Solutions North America $11,348M, Global Products $5,071M, Building Solutions EMEA/LA $4,296M, Building Solutions APAC $2,237M, summing to $22,952M, exactly reported revenue. For fiscal 2025 it reports three lines — Building Solutions North America $15,831M, Building Solutions EMEA/LA $4,968M, Building Solutions Asia Pacific $2,797M — summing to $23,596M, exactly reported revenue. Both years reconcile to the dollar, and neither uses the Americas/EMEA/APAC names the company now reports. The fiscal-2025 line labelled "Building Solutions North America" at $15,831M is 39% larger than the fiscal-2024 line of the same name, because Global Products was absorbed into it — so the two years cannot be compared. No segment growth figure in this dive comes from the payload.
The divestitures
Completed: residential and light commercial HVAC, sold to the Bosch Group, July 2025.
> "In 2024, the Company determined that the R&LC HVAC business, which was previously reported in the Global Products segment, met the criteria to be classified as discontinued operations as it represented a strategic shift in the Company's operations and resulted in the exit of substantially all of its residential and light commercial HVAC businesses. In July 2025, the Company completed the sale of its R&LC HVAC business."
That transaction is the explanation for four otherwise puzzling figures in the payload: fiscal-2025 inc_a net income of $3,291M against cf_a net income of $1,721M (the gain on sale); noncontrolling interests collapsing from $1,263M to $27M (the joint-venture interest went with it); total assets falling from $42,695M to $37,939M; and — most importantly — the $5,991M share repurchase in a year of $965M free cash flow.
Pending: ADT United Kingdom Residential Security.
> "During the third quarter of fiscal 2026, the Company signed a definitive agreement to sell its ADT United Kingdom Residential Security business and determined that it met the criteria to be classified as held for sale. The transaction is expected to close in fiscal 2027. The business did not meet the criteria to be classified as a discontinued operation... As of June 30, 2026, $229 million of assets and $39 million of liabilities associated with the business were separately presented as held for sale."
Read the two together and the direction is clear: out of residential, out of consumer-adjacent security, into commercial and institutional building systems. That is a portfolio being simplified toward the higher-margin, specification-driven end of the industry, and it is the substance of the turnaround.
The compensation scheme, which is the strongest governance signal in this batch
From the 8-K filed 2026-05-13:
> "On May 11, 2026, the Compensation and Talent Development Committee... approved the adoption of a long-term Value Growth Incentive Program... The Options vest only to the extent the Company achieves ambitious performance objectives at levels beyond what is currently embedded in the Company's incentive plans over a five-year performance period consisting of fiscal year 2026 through fiscal year 2030..."
> "Fifty percent (50%) of the Options will be contingent on achieving a specified level of net sales... representing significant growth relative to the Company's fiscal year 2025 net sales... Achievement of the Sales Goal is contingent on the Company also achieving a specified level of market capitalization... Fifty percent (50%) of the Options will be contingent on achieving a specified level of market capitalization... that is tied to achievement of aggressive growth and increased valuation goals."
> "...will be granted... with an exercise price equal to the price of the Company's ordinary shares on the date of grant and will therefore have value only to the extent the Company's share price increases after the grant date... The Options will be forfeited upon any other termination, including retirement or an involuntary termination for poor performance, prior to the end of the Performance Period."
This is unusually direct. Both halves of the award are conditioned on market capitalisation "representing a substantial increase from the Company's current market capitalization"; the options are struck at the money so they are worthless without appreciation; and they are forfeited on retirement. Management is paid to roughly transform this company or to receive nothing.
Two honest qualifications. The specific thresholds are not disclosed in the extracted text, so "significant" and "substantial" cannot be quantified. And a grant struck at the money on 2026-05-11, when the shares were near $145, is now materially in the money after a 44% year — an option package whose value has already begun accruing, and a dilution item that will show up in the share count.
2. Earnings — five consecutive beats, each larger than the last
| Report date | Fiscal quarter | Revenue | YoY | Adjusted EPS | estimate | beat |
|---|---|---|---|---|---|---|
| 2025-07-29 | Q3 FY2025 | $6,052M | — | $1.05 | $1.01 | +4.0% |
| 2025-11-05 | Q4 FY2025 | $6,442M | — | $1.26 | $1.20 | +5.0% |
| 2026-02-04 | Q1 FY2026 | $5,797M | — | $0.89 | $0.841 | +5.8% |
| 2026-05-06 | Q2 FY2026 | $6,142M | — | $1.19 | $1.12 | +6.3% |
| 2026-07-29 | Q3 FY2026 | $6,614M | +9.3% | $1.42 | $1.30 | +9.2% |
| 2026-11-04 | Q4 FY2026 | — | — | ? | $1.55 | — |
Trailing four quarters: $1.26 + $0.89 + $1.19 + $1.42 = $4.76. At $153.62 that is 32.3x trailing.
Five consecutive beats, and the margin of the beat has risen in every single one. That monotonic pattern is the most encouraging series in this file. For contrast in this batch: McKesson's five beats run 3.0%, 1.5%, 9.2%, 1.9%, 1.1% — no pattern; CME's run 1.7%, 1.9%, 0.7%, 0.6%, 2.7% — no pattern. A steadily widening beat under a new chief executive is what an operational reset looks like from the outside, and it is what the share price has been responding to.
The June-quarter operating detail, from inc_q:
| Q3 FY2026 | Q3 FY2025 | change | |
|---|---|---|---|
| Revenue | $6,614M | $6,052M | +9.3% |
| Gross profit | $2,474M | $2,246M | +10.2% |
| Gross margin | 37.4% | 37.1% | +30 bp |
| Operating income | $987M | $829M | +19.1% |
| Operating margin | 14.9% | 13.7% | +123 bp |
| Interest expense | $71M | $55M | +29.1% |
| Net income | $749M | $701M | +6.8% |
Revenue up 9.3%, operating income up 19.1%, and 123 basis points of operating margin. That is the margin expansion the FY2027 consensus requires, appearing.
The multi-year record, on a September fiscal year:
| Fiscal year | Revenue | growth | Operating income | Op margin | Free cash flow | Buyback |
|---|---|---|---|---|---|---|
| FY2022 | $20,637M | — | $2,012M | 9.8% | $1,503M | $1,441M |
| FY2023 | $22,331M | +8.2% | $2,437M | 10.9% | $1,775M | $625M |
| FY2024 | $22,952M | +2.8% | $2,421M | 10.5% | $1,604M | $1,246M |
| FY2025 | $23,596M | +2.8% | $2,828M | 12.0% | $965M | $5,991M |
Two rows deserve attention together. The operating margin has gone from 9.8% to 12.0% over three years and reached 14.9% in the June quarter — that is real. And free cash flow has gone from $1,775M to $965M over the same period, a 46% decline, while the buyback went from $625M to $5,991M. The second pair is funded by the Bosch sale, not by the business, and Section 4 sets out what that means.
3. Valuation — priced in or room?
At $153.62 (market capitalisation $93.05B, implied 605.7M shares):
| Trailing | FY2026E | FY2027E | FY2028E | |
|---|---|---|---|---|
| Adjusted EPS | $4.76 | $5.008 (8) | $5.936 (12) | $6.963 (6) |
| Estimate range | — | $4.857–$5.128 (5.6%) | $5.594–$6.249 (11.7%) | $6.439–$7.368 (14.4%) |
| Growth | — | — | +18.5% | +17.3% |
| P/E | 32.3x | 30.7x | 25.9x | 22.1x |
| Revenue | $23,596M (FY2025) | $25,479M (12) | $27,409M (14) | $29,495M (15) |
| Revenue growth | +2.8% | +8.0% | +7.6% | +7.6% |
| Net debt | $10,811M | — | — | — |
| Price / book | 7.2x | — | — | — |
| Price / TANGIBLE book | NEGATIVE — no anchor available | — | — | — |
| Dividend yield | 1.04% | — | — | — |
Estimate coverage is adequate on the near years and thin beyond. Eight analysts on FY2026 adjusted EPS, twelve on FY2027, only 6 on FY2028 and 3 and 2 on FY2029 and FY2030 respectively — both excluded from every conclusion. The FY2027 range of $5.594 to $6.249 is 11.7% wide.
Note the growth rows side by side: earnings forecast at 18.5% and 17.3% on revenue growing 8.0% and 7.6%. That is a margin forecast, and the June quarter's 123-basis-point operating-margin gain is the first hard evidence for it.
est.ebitdaAvg and est.ebitAvg fail two tests and are rejected. They carry the fixed-ratio signature — ebitdaAvg exactly 12.259% of revenueAvg and ebitAvg exactly 8.738% in FY2026, FY2027, FY2028, FY2029 and FY2030 alike. And netIncomeAvg EXCEEDS ebitAvg in every forward year — $3,266M against $2,226M in FY2026, $3,873M against $2,395M in FY2027, and so on — which is arithmetically impossible. All forward valuation uses epsAvg.
The historical est rows additionally straddle the divestiture and are not comparable. est.revenueAvg for fiscal 2024 reads $26,684M against an actual $22,952M — a 16.3% gap, because the estimate was struck before the residential HVAC business became a discontinued operation. est.revenueAvg for fiscal 2025 reads $23,484M against an actual $23,596M, a 0.5% agreement, so the series is clean from fiscal 2025 forward and unusable before it.
The balance sheet has no tangible anchor. Goodwill of $16,633M plus intangible assets of $3,613M is $20,246M against total equity of $12,927M — tangible equity is NEGATIVE $7,319M. priceToBookRatioTTM of 7.2x is computed on reported book, of which 157% is acquisition accounting. No book-value cross-check is applied to any fair value in this dive. Finance lease obligations of $1,310M are included in total debt of $11,190M; note that the fiscal-2024 and fiscal-2023 rows report capitalLeaseObligations of ZERO, so the debt series is not comparable across years — the direction is conservative, since including them raises current leverage.
Peer context is not drawn, and the vendor's own classification is wrong. profile.sector reads "Basic Materials" and profile.industry reads "Construction Materials" for a company that makes building control systems, chillers and fire-suppression equipment. That is a misclassification, not a judgment call — Johnson Controls is an industrial, and any screen grouping it with aggregates and cement producers is comparing it to the wrong universe. No cross-multiple is presented.
3a. What today's price assumes (the inversion)
At $153.62 — 30.7x FY2026 consensus, 25.9x FY2027 — the price embeds:
- Adjusted EPS reaches $5.008 in fiscal 2026 and $5.936 in fiscal 2027. (Consensus; 8 and 12 analysts.) The first three quarters of fiscal 2026 delivered $3.50 ($0.89 + $1.19 + $1.42), so the year needs $1.51 in the September quarter — and the guide is $1.55, so consensus expects a small beat to be required just to land the year.
- The operating margin keeps expanding. (Filing-verified: 14.9% in the June quarter against 13.7%.) This is the most fragile assumption in the price. Earnings forecast at 18.5% on revenue growing 8.0% requires roughly 200 further basis points of margin over two years, on top of the 220 basis points already delivered since fiscal 2022. Margin recovery from a depressed base is finite and this one is three years old.
- The beat streak continues. (Our number, from
earn_cal.) Five consecutive beats of widening size is what has taken the stock up 44% in twelve months. At 25.9x FY2027, a single miss is a de-rating event, and the September quarter is the first one where the comparison includes the new segment structure. - Free cash flow recovers toward $1.5-1.8 billion. (Our number, from
cf_a.) Fiscal 2025 was $965M against $1,775M in fiscal 2023. The buyback that has supported the share count was funded by the Bosch proceeds, and those are spent. If free cash flow stays near $1 billion, a buyback of consequence must come from the balance sheet, and net debt is already $10,811M. - The market keeps paying 22-31x forward earnings. (Our number.) At 20x FY2027E the stock is $119; at 30x it is $178. The stock traded at $103.52 within the last twelve months, which on the FY2027 number is 17.4x — so the re-rating has been roughly eight multiple points in a year.
3b. The return bridge (why the multiple moves)
Expected return over the next twelve months decomposes as: adjusted EPS growth (+18.5%, from FY2026E $5.008 to FY2027E $5.936) + multiple COMPRESSION (30.7x on the forward year moving to roughly 27x on the then-forward year, −12%) + shareholder yield (+1.0% dividend, plus a buyback whose sustainability is in question) ≈ +5% to +7%.
A caution the addendum requires: the rolldown from 30.7x FY2026 to 25.9x FY2027 at a constant price is mechanical and is not counted as compression. What our base assumes is that the market pays roughly 27x the FY2027 number a year from now, against the 30.7x it currently pays on FY2026 — genuine de-rating, on the ground that a stock that has re-rated by eight multiple points in twelve months on a turnaround three quarters old has priced a great deal of execution in advance.
Note the composition: essentially all of the return is earnings growth, most of which is handed back in de-rating, and the yield is a 1.04% dividend. The 6.4%-of-market-capitalisation buyback of fiscal 2025 cannot be annualised — it was a divestiture, not a policy.
If the multiple fell to 20x FY2027E the price is $119 (−22.6%). If it held at 30.7x, $182 (+18.6%).
3c. Variant perception (where we differ, what would surprise)
- We are 1.7% above consensus and 3.9% above its median, which is to say we have no variant perception, and we say so. Our $160 against a mean of $157.33 and a median of $154.00 — twenty-two basis points above the closing price. When 45 analysts, none of them at sell, produce a median target equal to the market price, there is no informational edge available and this dive does not pretend to one. A no-edge name at its 52-week high defaults to Hold, and this is the fourth clean example of that in this batch.
- We think the funding source of the buyback is under-examined and it is the most consequential item in the file. Fiscal-2025 free cash flow was $965M and the buyback was $5,991M — 6.2x. The difference came from selling the residential HVAC business to Bosch. Watchable number: fiscal-2026 free cash flow at the 2026-11-04 print. If it stays near $1 billion, the share count stops falling and roughly a third of the expected per-share growth goes with it.
- We think the data-centre exposure is the most interesting undisclosed number in this dive. The company names data centres first among its target markets in the 10-Q's own description of itself, and quantifies it nowhere in this archive. Watchable event: any disclosure sizing data-centre revenue or backlog. Given what the sector's capital expenditure is doing, a company that supplies mission-critical thermal management into it and has not told shareholders how much is either being modest or has less than the sentence implies.
- We think the compensation scheme is a genuine signal and it cuts both ways. Options that vest only on a net-sales goal AND a market-capitalisation goal "representing a substantial increase from the Company's current market capitalization", forfeited on retirement, is about as aligned as executive pay gets. It is also a large at-the-money option grant made on 2026-05-11 near $145, now materially in the money after a 44% year, and the specific thresholds are not disclosed in the extracted text.
- Positive surprise that would force a re-rate: free cash flow above $1.6 billion in fiscal 2026, which would make the buyback self-funding; a sixth consecutive beat with the margin of the beat still widening; an operating margin above 16%; or any quantification of the data-centre business.
- Negative surprise that would break the thesis: a miss at the 2026-11-04 print, which after five widening beats would be a genuine surprise; free cash flow below $1.2 billion; an operating margin retreating below 13%; the ADT UK divestiture slipping beyond fiscal 2027; or a goodwill impairment, on $16,633M of goodwill against $12,927M of equity.
Synthos fair values
All three anchors are multiples of the FY2027 consensus adjusted EPS distribution (mean $5.936, low $5.594, high $6.249, 12 analysts). No book-value cross-check is applied, because tangible equity is negative $7,319 million.
- Bear ~$112 — 20.0x the FY2027 consensus LOW of $5.594, cross-checked at 22.4x FY2026E. 8.2% above the 52-week low of $103.52 and 13.8% below the street's own low target of $130. The scenario: the beat streak breaks, margin expansion plateaus, free cash flow stays near $1 billion so the buyback stops, and a stock that re-rated eight multiple points in a year gives them back. −27.1%.
- Base ~$160 — 27.0x the FY2027 consensus MEAN of $5.936, cross-checked at 31.9x FY2026E and 23.0x FY2028E. Sensitivity, stated openly: 25.9x — the current multiple held flat — gives $154, which is the street's median and within 0.3% of spot; 30x gives $178. The scenario: consensus delivers, the margin expansion continues, the ADT UK sale closes, free cash flow recovers modestly, and the multiple gives back a little of a very large twelve-month gain. +4.2%.
- Bull ~$200 — 32.0x the FY2027 consensus HIGH of $6.249, cross-checked at 28.7x FY2028E. 30.2% above the 52-week high of $153.62 and 11.1% above the street's own high target of $180. The scenario: the data-centre thermal-management business is quantified and is large, the operating margin reaches the high teens, free cash flow returns to $1.8 billion, and the Value Growth Incentive Program's market-capitalisation target starts to look achievable. +30.2%.
Base is 4.2% above spot; asymmetry roughly 1.11:1 (27.1% down, 30.2% up), plus a 1.04% dividend. A base case inside 5%, a payoff ratio of essentially one-to-one, and a street median target 0.25% above the price is a fully valued asset. This is a Hold.
4. Data integrity, insiders, and the empty knowledge base
The knowledge base — a second completely null sweep
Raw hits: 0. Entity matches: 0. Free-text hits: 0. Used: 0. Discarded: 0.
The sweep ran case-sensitive entity tokens JCI and Johnson Controls, plus case-sensitive word-bounded free-text patterns on both, across all 51,928 distilled claims. It returned nothing at all.
This is the second completely null sweep in this batch alongside CSX, and it differs informatively from the two homograph cases. USB returned three hits, all the Universal Serial Bus. MMM returned thirty-two, all string collisions on "$3M" and "MMM". Both were filtering problems. JCI returned literally nothing, and because "Johnson Controls" is an unambiguous two-word proper noun and "JCI" is a distinctive three-letter string, the null is a genuine measurement.
What is notably absent. The Synthos knowledge base holds a substantial body of commentary on data-centre construction and the physical constraints on artificial-intelligence buildout — power, cooling, grid capacity — including claims examined elsewhere in this batch on Constellation Energy, Freeport-McMoRan and Cadence. None of it names the company that supplies the mission-critical thermal management inside those buildings, and which names data centres first among its own target markets. That is a gap in the store's coverage rather than an absence of relevance, and it is worth recording as one.
Breadth 0, claim count 0, net conviction none. The lane is reported as empty rather than padded, and this dive is built entirely on the filings and the vendor payload.
Data integrity — six findings
1. seg_geo for fiscal 2025 contains a SINGLE line where fiscal 2024 carried four that reconciled exactly — REJECTED. The fiscal-2025 entry reads "UNITED STATES $13,303,000,000" and nothing else — 56.4% of the $23,596M reported revenue, with 43.6% unaccounted for. The fiscal-2024 entry carries United States $13,171M, Europe/Middle East/Africa $4,486M, Asia Pacific $2,856M and Other Foreign $2,439M, summing to $22,952M — exactly reported revenue. So the block goes from complete to 56% coverage in consecutive years. This is the HWM defect class — losing geographies between years — and the only usable datum is that the United States is roughly 56% of revenue.
2. seg_prod reconciles exactly in both years but uses THREE different structures, none of them the current one. Fiscal 2024 uses the old four segments (Global Products, Building Solutions North America, Building Solutions EMEA/LA, Building Solutions APAC) and sums to $22,952M — exact. Fiscal 2025 uses three lines (Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific) and sums to $23,596M — exact. But the company realigned into Americas, EMEA and APAC on 2026-04-01 with history recast, and neither payload year uses those names. The fiscal-2025 "Building Solutions North America" line of $15,831M is 39% larger than the fiscal-2024 line of the same name ($11,348M) because Global Products was absorbed into it — so a reader comparing the two would infer 39% growth in a segment that grew nothing like that. No segment growth figure in this dive comes from the payload.
3. est.ebitdaAvg and est.ebitAvg fail two tests — REJECTED. They carry the fixed-ratio signature (ebitdaAvg exactly 12.259% and ebitAvg exactly 8.738% of revenueAvg in five consecutive forward years), and netIncomeAvg EXCEEDS ebitAvg in every forward year — $3,266M against $2,226M in FY2026 and $3,873M against $2,395M in FY2027 — which is arithmetically impossible. All forward valuation uses epsAvg.
4. The historical est rows straddle the divestiture and are not comparable. est.revenueAvg for fiscal 2024 reads $26,684M against an actual $22,952M — a 16.3% gap — because the estimate was struck before the residential HVAC business became a discontinued operation. The fiscal-2025 estimate of $23,484M against an actual $23,596M agrees within 0.5%, so the series is clean from fiscal 2025 forward and unusable before it. Any multi-year estimate-accuracy analysis on this name will read the fiscal-2024 gap as a miss when it is a definitional change.
5. Tangible equity is NEGATIVE $7,319 million, so no book-based anchor is usable. Goodwill of $16,633M plus intangibles of $3,613M is $20,246M against total equity of $12,927M. priceToBookRatioTTM of 7.2x is computed on a book value that is 157% acquisition accounting. No book-value cross-check is applied anywhere in this dive. retainedEarnings additionally reads exactly ZERO for fiscal 2025 against $848M in fiscal 2024 and $1,384M in fiscal 2023 — a $5,991M buyback in a year of $1,721M of net income will exhaust retained earnings, so the figure is arithmetically plausible, but a hard zero is a rounding or presentation artefact rather than a measured value and it is not used.
6. capitalLeaseObligations reads $1,310M in fiscal 2025 and ZERO in both fiscal 2024 and fiscal 2023. Finance leases do not appear from nothing; the line was reclassified. Total debt of $11,190M (FY2025) against $9,493M (FY2024) is therefore not comparable, and the apparent $1,697M increase is largely presentational. The direction is conservative — including the leases raises current leverage — and net debt of $10,811M is stated on the fiscal-2025 basis.
One vendor classification error worth naming separately. profile.sector reads "Basic Materials" and profile.industry reads "Construction Materials" for a company that manufactures building control systems, chillers, fire detection and suppression equipment and security systems. Johnson Controls is an industrial. Any screen grouping it with aggregates, cement and construction materials producers is comparing it to entirely the wrong universe, and no peer comparison is drawn in this dive for that reason.
Also checked and recorded. The filing archive contains NO preserved [TABLE] markers — grep -c returns zero on all six files — so every filing-sourced figure in this dive is a prose statement in the 10-Q or an 8-K, and no primary statement line item was independently verified against a preserved table. inc_q passed the MO/APP two-basis test on revenue — nine quarters on one basis, with the four most recent matching earn_cal.revenueActual exactly ($6,442M, $5,797M, $6,142M, $6,614M). earn_cal passed the SPGI mixed-basis test — all six pairs on the adjusted-EPS basis. quote.yearHigh/yearLow ($154.32 / $103.07) against tech.hi52/lo52 ($153.62 / $103.52) — a 0.5% and 0.4% discrepancy; tech is used throughout, and note that on the tech basis the closing price EQUALS the 52-week high exactly. inc_q for the September 2025 quarter reports interestExpense of MINUS $21M against positive $49-71M in every other quarter — a sign error in the quarter containing the Bosch disposal, and that quarter's EBITDA figure is not used. Noncontrolling interests of $27M are immaterial for enterprise value. returnOnEquityTTM is present in km_ttm and absent from ratios_ttm; it is not used, because the equity base is 157% intangibles.
Non-equity tripwire — checked and passed. JCI is ordinary shares of an Irish public limited company, NYSE-listed. Price of $153.62 is not par-like; beta is 1.319; the dividend is variable ($1.60, 1.04%); volume was 4.18M shares (~$642M of turnover); the 52-week band of $103.52 to $153.62 is a 48% range. Note the Irish domicile, which means these are ordinary shares rather than US common stock and carry the associated withholding and corporate-law differences. This is common equity.
Insiders — two genuine sales, five tax withholdings, no purchases
| Date | Person | Role | Type | Shares | Price | Held after |
|---|---|---|---|---|---|---|
| 2026-05-14 | Todd M. Grabowski | VP and President, Americas | S-Sale | 4,274 | $145.50 | 28,015 |
| 2026-06-08 | Irene M. Esteves | Director (newly appointed) | A-Award (RSUs) | 937 | $0 | 937 |
| 2026-06-09 | Todd M. Grabowski | VP and President, Americas | S-Sale | 1,800 | $146.20 | 26,215 |
| 2026-07-14 | Christopher M. Scalia | EVP and CHRO | F-InKind (tax withholding) | 1,831 | $145.24 | 25,948 |
| 2026-07-14 | Christopher M. Scalia | EVP and CHRO | F-InKind (tax withholding) | 2,070 | $145.24 | 23,878 |
| 2026-08-02 | Marc Vandiepenbeeck | EVP and Chief Financial Officer | F-InKind (tax withholding) | 19,760 | $146.66 | 125,861 |
| 2026-08-02 | Lei Zhang Schlitz | VP & President, GP & Solutions | F-InKind (tax withholding) | 18,625 | $146.66 | 38,434 |
Five of the seven transactions are F-InKind tax withholdings — the mechanical, signal-free type that arises when restricted shares vest and the company retains shares to cover the tax. The two largest, by the chief financial officer (19,760 shares) and a divisional president (18,625 shares) on 2026-08-02, were filed on 2026-08-04 — the day of this dive — and represent a vesting event, not a decision.
The two genuine transactions are both sales by the same officer. Todd M. Grabowski, Vice President and President, Americas, sold 4,274 shares at $145.50 on 2026-05-14 and 1,800 at $146.20 on 2026-06-09, taking his holding from 32,289 to 26,215 — an 18.8% reduction, at prices roughly 5% below today's.
What the file does not contain: any transaction by Joakim Weidemanis, the chief executive, and not one open-market purchase by anyone. On a company that has just adopted a compensation programme explicitly tied to a substantial increase in market capitalisation, the absence of any open-market buying by the executives who will receive those options is worth noting — though the programme itself, granted at the money and forfeitable on retirement, is a stronger alignment mechanism than a discretionary purchase would be.
5. Verdict, kill-criteria and flip conditions
Hold.
The case for owning it, and it is genuinely good. Johnson Controls has beaten consensus in five consecutive quarters and the margin of the beat has widened in every one — 4.0%, 5.0%, 5.8%, 6.3%, 9.2%. The June quarter delivered revenue up 9.3% to $6,614M, operating income up 19.1%, and an operating margin of 14.9% against 13.7% — the margin expansion the FY2027 consensus requires, appearing. A chief executive appointed from outside the company has realigned four segments into three, completed the exit from residential HVAC through the Bosch sale, signed the ADT UK business for sale, and accepted a compensation programme that pays nothing unless the company achieves both a large sales goal and a market capitalisation "representing a substantial increase" from today's. That is a coherent, well-aligned turnaround.
The case against buying it here, which is the operative one. The stock closed AT its 52-week high, up 4.93% on the day, 48.4% above its low, up 44.3% over twelve months, with a maximum drawdown from peak over the entire trailing year of EXACTLY ZERO and an RSI of 70.8. The vendor's consensus target is $157.33, 2.4% above spot, and its MEDIAN is $154.00 — twenty-two basis points above the closing price, from 45 analysts of whom not one is at sell. Our base of $160 is 4.2% above spot with 1.11:1 asymmetry. The 6.4%-of-market-capitalisation buyback that supported fiscal 2025 was funded by divestiture proceeds — free cash flow was $965M against $5,991M of repurchase — and that source is spent while net debt is $10,811M. Tangible equity is negative $7,319 million. And the disclosure has been restructured twice in two years, so nothing in the payload's history is comparable: seg_geo for fiscal 2025 carries one line covering 56% of revenue where fiscal 2024 carried four that reconciled exactly.
We are not going to manufacture a Buy out of a 4.2% base case when the median analyst target is a quarter of a percent above the price. Nor is there any case for Avoid: the turnaround is real, filing-verified and accelerating, and the bear case requires the beat streak to break rather than the business to fail. Hold is the honest tier, and $125 is where the arithmetic changes.
Pre-registered KILL criteria — what would take this to Avoid:
- A miss at the 2026-11-04 print, which after five widening beats would be a genuine surprise and would remove the basis of the re-rating.
- Fiscal-2026 free cash flow below $1.2 billion, confirming that the cash-generation deterioration from $1,775M (FY2023) to $965M (FY2025) is structural rather than transitional.
- An operating margin below 13%, reversing the expansion from 9.8% (FY2022) to 14.9% (June quarter).
- A goodwill impairment, on $16,633M of goodwill against $12,927M of equity — the segment realignment of 2026-04-01 is exactly the event that triggers a goodwill retest.
- The ADT United Kingdom divestiture slipping beyond fiscal 2027, or completing materially below the $229M of held-for-sale assets.
- Net debt above $13 billion without a corresponding acquisition, indicating the buyback is being debt-funded.
- A break below the 200-day moving average of $131.11 on company-specific news.
Pre-registered UPGRADE conditions — what would take this to Buy — Tactical:
- A price at or below $125, which is 21.1x FY2027 consensus. At that level the same forecast produces a 28% base-case return and asymmetry past 2.5:1, and the verdict changes on arithmetic alone.
- Fiscal-2026 free cash flow above $1.6 billion, which would make a buyback of consequence self-funding for the first time since fiscal 2023.
- A sixth consecutive beat with the margin of the beat still widening, plus an operating margin above 16%.
- Any quantification of the data-centre business — revenue, backlog or growth rate. The company names it first among its markets and has told shareholders nothing about it.
- Disclosure of the Value Growth Incentive Program's actual thresholds, which would let shareholders see what "substantial increase from the Company's current market capitalization" means in dollars.
Where JCI fits in the Synthos Framework Portfolio. The industrials sleeve, held at existing weight if already owned, no new capital today. Sizing note, and it is the operative discipline: this is the only name in this batch whose closing price is identical to its 52-week high and whose maximum twelve-month drawdown is zero. A stock that has never given anything back is a stock with no established support beneath it, and the right response to a good turnaround at that price is a limit order rather than a position. Ours is $125. Logged as a tracked Synthos call (Hold) as of 2026-08-04 at $153.62, with the fair-value anchors, kill criteria and the $125 upgrade trigger all gradeable.
Single biggest risk: a buyback that is no longer self-funded, on a balance sheet with no tangible equity. In fiscal 2025 Johnson Controls generated $965 million of free cash flow and repurchased $5,991 million of stock — 6.4% of its current market capitalisation. The difference was the proceeds of selling the residential and light commercial HVAC business to the Bosch Group in July 2025, and that money is spent. Free cash flow has fallen 46% in two years, from $1,775 million in fiscal 2023. Net debt is $10,811 million; goodwill and intangibles of $20,246 million exceed total equity of $12,927 million, so tangible equity is negative $7,319 million and there is no asset backing beneath a 25.9x forward multiple. The consensus expects earnings to grow 18.5% and then 17.3% on revenue growing 8.0% and 7.6% — more than half of that gap is margin, and a meaningful part of the per-share arithmetic assumes a share count that keeps falling. If free cash flow stays near $1 billion, it will not. The kill criteria above lead with the cash-flow line for exactly that reason.
Provenance & disclosures
- Traceability: ZERO knowledge-base claims name Johnson Controls out of 51,928 distilled claims (raw hits 0, entity matches 0, free-text hits 0, used 0, discarded 0; breadth 0, net conviction none). This is the second completely null sweep in this batch alongside CSX, and it differs informatively from the two homograph cases: USB returned three hits (all the Universal Serial Bus) and MMM returned thirty-two (all string collisions on "$3M" and "MMM"), so both were filtering problems, whereas JCI returned literally nothing. Because "Johnson Controls" is an unambiguous two-word proper noun and "JCI" is a distinctive three-letter string with low collision potential, the null is a genuine measurement: no expert in the Synthos knowledge base has expressed a recorded view on this company, on building systems and thermal management, or on the data-centre cooling demand the company's own filing names first among its markets. That last omission is worth recording as a coverage gap rather than an absence of relevance — the store holds a substantial body of commentary on data-centre buildout and its physical constraints, examined elsewhere in this batch on Constellation Energy, Freeport-McMoRan and Cadence, and none of it names the company that supplies the mission-critical thermal management inside those buildings. The lane is reported as empty rather than padded with adjacent macro claims about construction, capital expenditure or AI infrastructure, none of which name this company.
- Data as-of: fundamentals — the three-segment realignment, the R&LC HVAC divestiture, the ADT United Kingdom held-for-sale classification and the company's own description of its markets, all through 2026-06-30, from the 10-Q filed 2026-07-29; the Value Growth Incentive Program from the 8-K filed 2026-05-13; the board appointment from the 8-K filed 2026-06-03 · estimates 2026-08-04 · prices 2026-08-04, quote timestamp 1785873602 = 2026-08-04T20:00:02Z ($153.62, +4.93%; 50-DMA $142.67; 200-DMA $131.11; RSI 70.8; MACD +1.31;
pct_from_hi0.0 andmax_dd_from_peak0.0) · knowledge-base claims 2026-08-04. Johnson Controls' fiscal year ends 30 September; fiscal 2025 means the year ended 2025-09-30, and the most recent reported quarter is the THIRD quarter of fiscal 2026. All figures come from the Synthos vendor data file for JCI or from the SEC filings in the JCI archive; no figure comes from memory, recall or external retrieval. - Filing archive contents and its limits: 10-K filed 2025-11-14 (fiscal year ended 2025-09-30); 10-Q filed 2026-05-06 (second fiscal quarter); 10-Q filed 2026-07-29 (third fiscal quarter, ended 2026-06-30 — the primary source, and the origin of the segment-realignment disclosure, the R&LC HVAC and ADT UK divestiture language and the company's self-description); 8-K filed 2026-05-13 (adoption of the Value Growth Incentive Program on 2026-05-11); 8-K filed 2026-06-03 (Irene Esteves appointed to the board, board increased to 12 directors); 8-K filed 2026-07-29 (third-quarter results, Item 2.02 — the press release is Exhibit 99.1 and is furnished, not in the extracted text). NO file in this archive contains a
[TABLE]marker — statement tables were not preserved for this name, verified bygrep -creturning zero on all six files. Every filing-sourced figure in this dive is therefore a prose statement, and no primary statement line item was independently verified against a preserved table. - Where the filings contradicted or corrected the vendor: the segment structure — the 10-Q states the Company "realigned into three reportable segments (Americas, EMEA and APAC) from four reportable segments (Global Products, Building Solutions North America, Building Solutions EMEA/LA and Building Solutions APAC)" effective 2026-04-01 with history recast, while
seg_produses the OLD four-segment names for fiscal 2024 and a three-line variant for fiscal 2025 that matches NEITHER structure, with the fiscal-2025 "Building Solutions North America" line of $15,831M being 39% larger than the fiscal-2024 line of the same name because Global Products was absorbed into it; the corporate actions — the July 2025 completion of the R&LC HVAC sale to the Bosch Group (classified as discontinued operations, and the explanation for the $3,291Minc_anet income against $1,721M incf_a, for noncontrolling interests collapsing from $1,263M to $27M, and for the $5,991M buyback against $965M of free cash flow), and the third-fiscal-quarter agreement to sell ADT United Kingdom Residential Security with $229M of assets and $39M of liabilities held for sale and expected to close in fiscal 2027, neither of which appears in any vendor field; and the compensation programme adopted 2026-05-11, likewise absent. Where vendor and filing AGREED — recorded:inc_qthird-quarter revenue of $6,614M matchesearn_cal.revenueActualexactly, as do the three preceding quarters; andseg_prodreconciles to the reported revenue line to the dollar in both fiscal 2025 and fiscal 2024, despite using structures the company no longer reports. - Rejected or corrected:
seg_geofor fiscal 2025, which contains a SINGLE line — "UNITED STATES $13,303,000,000", 56.4% of revenue, with 43.6% unaccounted for — against a fiscal-2024 entry carrying four lines that sum to $22,952M, exactly reported revenue (the HWM defect class, losing geographies between years; the only usable datum is that the United States is roughly 56% of revenue);seg_prodfor year-over-year comparison, for the structural reasons above;est.ebitdaAvgandest.ebitAvgfor the fixed-ratio signature (exactly 12.259% and 8.738% ofrevenueAvgin five consecutive forward years) AND fornetIncomeAvgEXCEEDINGebitAvgin every forward year ($3,266M against $2,226M in FY2026), which is arithmetically impossible; the historicalestrows before fiscal 2025, becauseest.revenueAvgfor fiscal 2024 reads $26,684M against an actual $22,952M — a 16.3% gap arising from the discontinued-operations reclassification rather than from a forecast error, while the fiscal-2025 estimate agrees within 0.5%; all book-value anchors, because goodwill of $16,633M plus intangibles of $3,613M is $20,246M against total equity of $12,927M, giving tangible equity of NEGATIVE $7,319M and a reported book value that is 157% acquisition accounting;retainedEarnings, which reads exactly ZERO for fiscal 2025 against $848M and $1,384M in the two prior years — arithmetically plausible after a $5,991M buyback on $1,721M of net income, but a hard zero is a presentation artefact and is not used;capitalLeaseObligations, which reads $1,310M in fiscal 2025 and ZERO in both fiscal 2024 and fiscal 2023, making total debt non-comparable across years (net debt of $10,811M is stated on the fiscal-2025 basis, and the direction is conservative); and the September-2025inc_qrow'sinterestExpenseof MINUS $21M against positive $49-71M in every other quarter, with that quarter's EBITDA figure not used. The FY2029 and FY2030 estimate rows rest on 3 and 2 analysts and are excluded from every conclusion. - Vendor classification error, named separately:
profile.sectorreads "Basic Materials" andprofile.industryreads "Construction Materials" for a company that manufactures building control systems, chillers, air handling, fire detection and suppression, and security equipment. Johnson Controls is an industrial, and any screen grouping it with aggregates and cement producers is comparing it to entirely the wrong universe. No peer-multiple comparison is drawn in this dive for that reason. returnOnEquityTTM— source stated: present inkm_ttmand absent fromratios_ttm. Not used, because the equity base is 157% intangibles.- Estimate coverage: 8 analysts on fiscal-2026 adjusted EPS and 12 on fiscal 2027 — the anchor for all three fair values, with an FY2027 range of $5.594 to $6.249 (11.7%); 6 on fiscal 2028, used for cross-check; 3 and 2 on fiscal 2029 and 2030, both excluded from every conclusion.
- Fair-value caveat: the $112 / $160 / $200 anchors are multiples of the fiscal-2027 consensus adjusted EPS distribution — 20.0x the low of $5.594, 27.0x the mean of $5.936, and 32.0x the high of $6.249 — cross-checked against fiscal 2026 and fiscal 2028. Stated arithmetic, not a discounted cash flow. NO book-value cross-check is applied, because tangible equity is negative $7,319 million — an unusual and stated limitation. The base is sensitivity-disclosed: 25.9x — the current fiscal-2027 multiple held flat — gives $154, which is BOTH the street's median target AND within 0.3% of the closing price; 30x gives $178. The base assumes genuine multiple DE-RATING from the 30.7x currently paid on fiscal 2026 toward roughly 27x on fiscal 2027 a year hence, on the ground that the stock has re-rated by roughly eight multiple points in twelve months on a turnaround three quarters old; the mechanical rolldown from 30.7x to 25.9x at a constant price is NOT counted as compression.
- Timing: third-quarter fiscal-2026 results were released 2026-07-29, six days before this dive, beating consensus adjusted EPS by 9.2% ($1.42 against $1.30) on revenue of $6,614M — up 9.3% year on year — against $6,463M estimated. That was the fifth consecutive beat and the largest of the five; the margin of the beat has widened in every one of them (4.0%, 5.0%, 5.8%, 6.3%, 9.2%). The next print is 2026-11-04, 92 days away — the fourth quarter and full fiscal year — with consensus of $1.55 and $7,003M. The most recent insider filings are dated 2026-08-04, the day of this dive, and are tax-withholding events on vesting (19,760 shares for the chief financial officer and 18,625 for a divisional president, both at $146.66 on 2026-08-02); the only genuine transactions in the file are two open-market sales by one officer in May and June totalling 6,074 shares, an 18.8% reduction, and there is not one purchase. 2026-08-04 carried no company-specific filing other than those Forms 4, and the stock rose 4.93% to close exactly at its 52-week high.
- Accessibility note: no information in this dive is conveyed by colour. All emphasis is carried by bold text, table structure and explicit labelling.
- Not investment advice. Independent research, educational and informational only, never personalised. No recommendation to buy, sell or hold any security is made to any person.
- Version: 2026-08-04-full.