Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Can Johnson Controls (JCI) Earnings Pull a Surprise in Q2?

Johnson Controls Inc. JCI is set to report second-quarter fiscal 2016 (ended Mar 31, 2016) results on Apr 21. In the last quarter, the company had delivered a negative earnings surprise of 1.20%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Johnson Controls expects earnings per share in the second quarter of fiscal 2016 to be in the range of 80–83 cents, up 10%–14% from 73 cents recorded in the second quarter of fiscal 2015. Revenues should benefit from an improvement in results in the Building Efficiency and Power Solutions segments. Higher automotive production will also have a favorable impact on revenues. Organic sales from both Building Efficiency and Power Solutions are projected to increase by 10% in fiscal 2016. All these factors should favorably impact results in the quarter to be reported.

However, negative foreign currency translation is affecting Johnson Controls’ results.

Earnings Whispers

Our proven model does not conclusively show that Johnson Controls is likely to beat earnings this quarter. This is because a stock needs to have both a positive http://www.zacks.com/earnings/earnings-surprise-predictions/">Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Johnson Controls’ Earnings ESP is 0.00% because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 82 cents.

Zacks Rank: Johnson Controls’ Zacks Rank #2 (Buy) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Ferrari N.V. RACE has an Earnings ESP of +12.5% and a Zacks Rank #3 (Hold). The company will report first-quarter 2016 financial numbers on May 2.

American Axle & Manufacturing Holdings Inc. AXL has an Earnings ESP of +4.23% and a Zacks Rank #3. The company will report first-quarter 2016 financial numbers on May 6.

Autoliv, Inc. ALV has an Earnings ESP of +1.33% and a Zacks Rank #3. The company’s first-quarter 2016 financial results are scheduled for release on Apr 29.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. http://www.zacks.com/registration/pfp/?ALERT=RPT_7BST_LP194&... blog">Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
JOHNSON CONTROL (JCI): Free Stock Analysis Report
 
AMER AXLE & MFG (AXL): Free Stock Analysis Report
 
AUTOLIV INC (ALV): Free Stock Analysis Report
 
FERRARI NV (RACE): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research