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    JCI · NYQ · Industrials

    Johnson Controls International plc

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 22.16

    Market price

    USD 143.28

    Implied upside

    -84.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 26.1x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 22.16-84.5%
    Exit multiple
    USD 77.16-46.1%
    Market price
    USD 143.28

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 24.7bnUSD 25.8bnUSD 27.0bnUSD 28.2bnUSD 29.5bn+4.6%
    EBITUSD 2.7bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.2bn+4.6%
    NOPATUSD 2.4bnUSD 2.5bnUSD 2.6bnUSD 2.7bnUSD 2.9bn+4.6%
    Add depreciation & amortisationUSD 865.5mUSD 905.1mUSD 946.4mUSD 989.6mUSD 1.0bn+4.6%
    Less capital expenditureUSD -515.0mUSD -538.5mUSD -563.1mUSD -588.8mUSD -615.7m+4.6%
    Less increase in working capitalUSD -1.1bnUSD -1.1bnUSD -1.2bnUSD -1.2bnUSD -1.3bn+4.6%
    Free cashflow to firmUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.0bn+4.6%
    Discount factor0.94960.85640.77220.69640.6280-
    Present valueUSD 1.6bnUSD 1.5bnUSD 1.4bnUSD 1.3bnUSD 1.3bn-5.7%
    Present Value Of The ForecastUSD 7.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.204Reported 1.304, pulled toward 1.0 (Blume)
    Cost of equity11.62%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 86.8bn89.8% of capital
    Total debtUSD 9.9bn10.2% of capital, book value as a proxy
    Tax rate9.9%Effective, capped at statutory
    WACC10.89%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 22.16

    71% of EV

    Forecast FCFF, final year
    USD 2.0bn
    Capex at depreciation, working capital in reinvestment
    USD 2.9bn
    Less reinvestment at g/ROIC (23.0% of NOPAT)
    USD -657.4m
    Capitalised
    USD 2.2bn
    ROIC (WACC floor)
    10.9%
    Terminal value, undiscounted
    USD 27.0bn
    Terminal value, discounted
    USD 16.9bn
    Enterprise value
    USD 24.0bn
    Less net debt
    USD 9.5bn
    Equity value
    USD 14.5bn

    Exit at 20.0x EBITDA

    Value per shareUSD 77.16

    88% of EV

    Terminal value, undiscounted
    USD 84.2bn
    Terminal value, discounted
    USD 52.9bn
    Enterprise value
    USD 60.0bn
    Less net debt
    USD 9.5bn
    Equity value
    USD 50.5bn

    Spread between methods: 111%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.89%30.8331.0031.1731.3331.50
    9.89%25.9126.0526.2026.3426.49
    10.89%21.9022.0322.1622.2822.41
    11.89%18.5918.7018.8118.9319.04
    12.89%15.8115.9116.0116.1016.20

    Outlined: this model. Green text: above today's price of 143.28. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    EBIT margin10.8%42.3%+31.5pp
    Discount rate10.9%4.3%-6.6pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.