Johnson Controls International plc JCI
Verdict: Sell. Fair value $85.21 against a price of $122 on 6 Jan 2026, 30% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Market leadership enables pricing power. Industry tailwinds with growing market.
The case against: Intense competitive pressure could compress margins. The ratio of Operating Cash Flow to Net Income plummeted from a healthy 1.23 in 2024 to an alarming.... Net Income nearly doubled from $1.71B in 2024 to $3.29B in 2025, while Operating Cash Flow....
Main risks
- Collapsing Free Cash Flow: FCF has declined sharply from $1.77B in 2023 to $0.96B TTM, a ~46% drop, indicating a severe deterioration in cash generation.
- Extremely High Leverage: The estimated Net Debt to EBITDA ratio is ~7.1x. This is significantly above the typical cautionary threshold of 4-5x and points to high financial risk.
- Poor Capital Allocation and Returns: The estimated ROIIC of 5.1% and ROIC of 1.8% are abysmal. This suggests that recent investments are value-destructive and the company is failing to earn its cost of capital.
- The ratio of Operating Cash Flow to Net Income plummeted from a healthy 1.23 in 2024 to an alarming...
- Net Income nearly doubled from $1.71B in 2024 to $3.29B in 2025, while Operating Cash Flow...
- Intense competitive environment