Can Johnson Controls Drive Higher in 2013?


As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Johnson Controls (NYS: JCI) . The automotive part supplier and HVAC and power specialist had a relatively flat 2012, but investors hope that the company will rebound more sharply if the economy starts to get better. Below, you'll learn more about Johnson Controls's prospects for 2013.

Stats on Johnson Controls

Average Stock Target Price


Fiscal 2013 EPS Estimate


Fiscal 2014 EPS Estimate


Fiscal 2013 Sales Growth Estimate


Fiscal 2014 Sales Growth Estimate


Forward P/E


Source: Yahoo Finance.

Will Johnson Controls rev up its engines in 2013?
As far as analysts are concerned, 2013 will be a mixed year for Johnson Controls. From a fundamental standpoint, the business looks healthy with a very modest increase in earnings in the first nine months of 2013 followed by accelerated growth when fiscal 2014 begins in October. But from a share-price perspective, analysts see little upside, as the target price represents just a 2% gain from current levels.

Part of the challenge that Johnson Controls faces is the fact that the long-awaited economic recovery around the world hasn't yet taken shape. With ongoing troubles in Europe, both Ford (NYS: F) and General Motors (NYS: GM) are struggling to keep sales figures up, and that will represent continuing pressure on Johnson Controls' auto-component business.

One interesting idea that CNBC's Jim Cramer suggested recently was that Johnson Controls might do better by breaking itself into its component pieces. With its car-battery business as the principal supplier to AutoZone (NYS: AZO) , Sears Holdings (NAS: SHLD) , and other auto-parts sellers, Johnson Controls could spin that business off along with its development of hybrid car batteries. That would leave its building HVAC and security-system business and the rest of its automotive business independent to pursue their niches.

For investors, 2013 appears likely to be more of a waiting game. Unless the economy perks up earlier than expected, all eyes will be on 2014 to see if the bounce-back that investors have been waiting for looks likely to take shape next year.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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