Johnson Controls Or Carrier Global? Picking The Winner (NYSE:CARR)

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At the request of my exclusive subscriber to compare Johnson Controls International (NYSE:JCI) and Honeywell International (HON), I decided to prepare a detailed comparison article.

However, upon further scrutiny of the companies’ operations, it became evident that while both HON

Operation metrics JCI CARR
Market cap [$B] 44.59 40.11
Revenue [$B, TTM] 26.09 21.04
Gross profit [$B, TTM] 8.827 5.549
EBITDA [$B, TTM] 2.564 3.836
Net income [$B, TTM] 1.391 2.528
CFO [$B, TTM] 1.684 2.065
CAPEX to Sales [TTM] 2.20% 1.70%
Total employees [FY] 102,000 52,000

Data by YCharts

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Seeking Alpha Charting

  1. Buildings Solutions Segment: In North America, organic sales in the Buildings Solutions group increased by 14% YoY. Strong growth was observed in both Service and Install, particularly in HVAC & Controls and Fire & Security. In the EMEA/LA region, Building Solutions revenue grew by 12% organically, with low double-digit growth in Service and Install. The Asia Pacific region experienced a 15% increase in revenue. However, margins narrowed in the APAC and EMEA/LA regions. Order rates showed an 8% increase in North America, 7% in EMEA/LA, and 9% in Asia Pacific.

  2. Global Products Segment: it recorded a 12% rise in revenue on an organic basis. Growth was driven by Industrial Refrigeration, Residential HVAC, and Fire Detection products. The adjusted segment EBITA margin expanded by 250 basis points to 18.6%.

Additionally, JCI’s sales backlog stood at $11.7 billion, representing a 9% increase compared to the previous year. On the top line, they anticipate organic sales to grow approximately 10% for the full year.

  1. HVAC Segment: HVAC revenues increased by 6% YoY on an organic basis. The segment’s adjusted operating profit rose by 3%, but the adjusted operating margin narrowed by 260 basis points to 13.5%. The Commercial HVAC business drove the results, while Residential HVAC experienced a slowdown. Looking ahead, mid-single-digit growth is anticipated in this group for 2023 due to solid Commercial HVAC orders.

  2. Refrigeration Segment: Refrigeration revenues declined by 5% YoY. The segment’s adjusted operating profit fell by 1%, but the adjusted operating margin widened by 90 basis points to 12.4%. The North American truck/trailer business is beginning a cyclical recovery, which is expected to lead to low single-digit sales growth in 2023.

  3. Fire & Security Segment: the revenues increased by 9% YoY. However, the segment’s adjusted operating profit declined by 8%, and the adjusted operating margin narrowed by 190 basis points to 12.4%. For 2023, low single-digit sales growth is expected in this segment, and management is focused on improving margins.

Goldman Sach [June 1, 2023 - proprietary source]

Goldman Sachs [June 1, 2023 – proprietary source], author’s notes

Seeking Alpha Premium

Seeking Alpha Premium, author’s notes

Data by YCharts

The CEO: “Year-to-date, we have returned over $700 million in capital, including roughly $250 million in share repurchases and nearly $500 million in cash dividends.” Repurchased $62 million during Q1 and paid out $154 million in dividends [=$216 million in total].

EPS YoY-growth rates JCI CARR
2023 19.07% 10.02%
2024 13.77% 8.73%
2025 12.23% 10.76%
2026 10.29% 17.88%
2027 7.95% 7.80%
Median: 12.23% 10.02%
CAGR [2023-27] 8.75% 8.92%

implied P/Es JCI CARR
2023 18.19 18.66
2024 15.99 17.17
2025 14.25 15.50
2026 12.92 13.15
2027 11.97 12.20
Median: 14.25 15.50
CAGR of P/E contraction [2023-27] -8.03% -8.15%

Bloomberg data

Bloomberg data

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