Johnson Controls: 5 Reasons to Own This Engineering Giant

Key Points

• Johnson Controls is a global provider of building technologies and products, and it has the largest portfolio of HVAC equipment.
• Johnson Controls reported robust fiscal first quarter 2025 top and bottom-line results and raised its second-quarter and full-year guidance.
• The company is one of the top three data center thermal management providers.

Johnson Controls International plc NYSE: JCI is a leading global engineering company specializing in building technology solutions. 

The construction sector heavyweight offers everything from security, refrigeration, and fire prevention to heating, ventilation, and air conditioning (HVAC) systems.

The stock is already having a stellar start to the year, posting 11% year-to-date (YTD) gains as of Feb 7, 2025. 

The S&P 500 index leader may have hit all-time highs, but there's more to come. Here are five reasons to own this global engineering powerhouse.

1) The World’s Largest HVAC Supplier Sees Data Center Growth

The artificial intelligence (AI) boom is driving the growth and capacity of data centers, especially for those catering to AI and high-performance computing (HPC) workloads. AI applications and queries can require up to 4x more electricity to achieve. This results in heat generation and lots of it. Johnson Controls has the largest portfolio of HVAC equipment in the world. It was named the #1 implementer among data center thermal management providers.

They are “… one of only two players to be named an overall leader in the field.” The top three include Johnson Controls, Vertiv Holdings Co. NYSE: VRT, and Daikin Industries Ltd. OTCMKTS: DKILY. In its FQ1 2025 conference call, it noted that North American systems orders grew 20% YoY, driven by strong demand for data centers along with healthcare and manufacturing. Their data center vertical continues to accelerate.

CEO George Oliver commented on data center activity not slowing down for years, “And then some of it had to do with further visibility that some of our large data center customers have now on their demand for cooling over the next couple of years. But we don't see that momentum slowing down whatsoever.”

2) Johnson Controls Crushed Fiscal Q1 2025 and Raised Guidance

For its fiscal first quarter of 2025, Johson Controls reported EPS of 64 cents per share, beating consensus estimates by 5 cents. Revenues grew 4.2% YoY to $5.43 billion, beating the $5.29 billion consensus estimates. Organic sales rose 10%, and orders grew 16% YoY. Its Building Solutions backlog grew 11% YoY organically to $13.2 billion.

The company sees strength continuing in 2025 and raised forecasts. For FQ2 2025, the company expected EPS of 77 to 79 cents versus 73 cents consensus analyst estimates. For the fiscal full year 2025, the company raised EPS expectations to $3.50 to $3.60, up from $3.40 to $3.50 previously, versus $3.47 consensus estimates.

3) The Company Could Benefit From Trump’s Return-to-Office Mandates

President Trump’s return-to-office mandate for federal employees means more people will be back in the office, which can equate to more service, maintenance, and upgrades for HVAC and other building solutions. Many companies use the federal government guidelines for their workers, which can magnify the impact on Johnson Controls as more workers return to the office.

4) Trump’s Administration Will Have Looser Environmental Regulations

While building codes and permits are managed locally, the federal government has agencies like the Environmental Protection Agency (EPA) as its regulations can impact construction. Trump has vowed to cut down the size and reach of government and agencies. Having overseen numerous real estate projects, Trump is familiar with the red tape involved in securing permits and launching construction developments. The bottom line is that a less regulatory environment is cohesive toward growing new building and office construction projects, many of which will need Johnson Control’s products and solutions.

5) JCI Stock Is Forming a Weekly Bull Flag Breakout

A bull flag pattern is comprised of two parts. First, the underlying stock forms the flagpole, which is a steep stock price run up, usually at a 45-degree or higher angle. The flagpole completes when the stock forms its peak. The flag is formed on the parallel descending trendlines comprising lower and lower highs. The bull flag triggers when the stock surges through its upper descending trendline and past the peak of the flagpole.

JCI’s weekly candlestick chart depicts a bull flag breakout. The flagpole peaked at the $87.16 swing high as it formed the flag on parallel descending upper and lower trendlines. The bull flag triggered the reaction from its FQ1 2025 earnings release, causing buyers to swarm in, taking JCI to new all-time highs. The weekly anchored VWAP is rising at $66.33. The weekly RSI is bouncing up to the 66-band. Fibonacci Fib pullback support levels are at $81.31, $76.72, $70.27, and $65.68. 

Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered call at upside Fib levels executes a wheel strategy for income on top of its 1.69% annual forward dividend yield.