Skip to Content
US Videos

Johnson Controls Is an Attractive Investment Opportunity

Recent performance has been choppy, but the narrow-moat firm's building technologies business has one of the most comprehensive product portfolios in the industry.


Brian Bernard: We continue to view narrow-moat Johnson Controls as an attractive investment opportunity. Following its transformative merger with Tyco and its spin-off of its automotive seating business in 2016, Johnson Controls has become a more profitable and less cyclical company, and the firm remains on track to realize over $1 billion in cost synergies by fiscal 2020.

Still, shares have underperformed since the company's transformation leaving shareholders frustrated. However, we think the market has been too focused on the company's recent performance, which has been choppy in part due to its integration efforts with Tyco, and the market is missing the longer-term picture. Based on our analysis, we believe Johnson Controls' building technologies business has one of the most comprehensive product portfolios in the industry. Only United Technologies has a similar product portfolio that spans across commercial HVAC, building automation and controls, and fire and security, and United Technologies is facing activist pressure to sell or spin-off this business. If this happens, we think Johnson Controls could take advantage of disruption at a key competitor.

Brian Bernard does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.