Johnson Controls International PLC

U.S. shipments of central air conditioners and air-source heat pumps surged 21.7% in June to a combined 1.02 million units, according to the Air-Conditioning, Heating and Refrigeration Institute. Central air-conditioner shipments rose 26.8% to 605,033 units, while heat-pump shipments increased 15.1% to 418,538. For the first half of the year, combined shipments rose 3% to 4.72 million units, nearly unchanged from the same period in 2024. Gas warm-air furnace shipments increased 15.2% in June to 320,281 units, but fell 6.2% for the first half to 1.55 million units. Residential gas storage water heater shipments rose 6.7% in June to 363,347 units, while electric models edged up 0.8% to 422,813, though first-half shipments for both categories remained lower than a year earlier.

Johnson Controls International launched its Absorption Chiller Reference Design Guide, a blueprint that converts waste heat from on-site generators into cooling capacity, potentially unlocking up to 97 megawatts of additional computing capacity in a one-gigawatt AI factory without adding new power generation. The design targets the 57% of energy typically lost as waste heat, cutting cooling-related electric demand by up to 44% and pushing power usage effectiveness as low as 1.23, with zero on-site water use. Johnson Controls estimates the efficiency gains could support up to $18 billion in additional revenue over a facility's life. The launch came one day before the company reported fiscal third quarter 2026 results, with sales rising 9% to $6.6 billion, organic sales up 10%, orders growing 27% organically, and total backlog reaching $21.0 billion, up 32% organically. The Americas segment saw orders climb 37% and backlog hit $15.9 billion, up 40% year over year, prompting Johnson Controls to raise its full-year guidance for organic sales growth to about 8% and adjusted earnings per share to about $5.05. However, on August 4, VP and President Lei Zhang Schlitz sold 23,417 shares at a weighted average price of $153.07, cutting his direct stake by 61%, while EMEA sales slipped 1% and GAAP corporate expense rose 18%.

Johnson Controls raised its full-year organic revenue and adjusted EPS guidance after reporting third-quarter results that beat expectations. Organic sales increased 10% year over year, driven by strength in applied HVAC and continued expansion across systems and service segments, while adjusted EPS reached $1.42, a 35% increase from the prior year. Total orders grew 27% organically, led by a 40% increase in systems orders, and backlog reached a record $21 billion, representing 32% year-over-year organic growth. The company now expects full-year organic revenue growth of approximately 8%, up from the previous expectation of 6%, and adjusted EPS of approximately $5.05, up from the original estimate of $4.85. Fourth-quarter organic sales are projected to grow 9% to 10%, with adjusted EPS of approximately $1.55.

Johnson Controls International reported third-quarter fiscal 2026 adjusted earnings of $1.42 per share, beating the Zacks Consensus Estimate of $1.32 and rising 35.2% year over year. Total revenues from continuing operations reached $6.61 billion, surpassing the consensus estimate of $6.43 billion and increasing 9.3% year over year, with organic revenues up 10%. The Americas segment posted revenues of $4.50 billion, up 11% organically, while EMEA revenues totaled $1.26 billion with 1% organic growth, and APAC revenues jumped 15% to $846 million on 15% organic growth. The company raised its full-year fiscal 2026 guidance, now expecting adjusted earnings per share of approximately $5.05, up from the prior $4.85, on organic revenue growth of about 8%.

Johnson Controls International has received the 2026 Joseph M. Brillhart Innovation Award from the International District Energy Association for its hybrid steam-electric chiller project at the University of Windsor. The project replaces an aging gas-fired boiler with a steam turbine centrifugal chiller and heat recovery steam generator, cutting greenhouse gas emissions and reducing peak grid electricity demand. The award reinforces the company's technical credibility in district energy and decarbonization, aligning with its May 2026 expansion of a heat pump and chiller facility in Holme, Denmark. While the recognition supports long-term growth drivers for low-carbon cooling solutions, it does not materially alter near-term earnings catalysts ahead of third-quarter 2026 results, and investors continue to monitor operational complexity that could slow margin progress.

The Europe HVAC market is projected to grow from an estimated $45 billion in 2025 to $58.67 billion by 2031, at a compound annual growth rate of approximately 4.52%. Key drivers include AI-driven smart HVAC ecosystems, urban expansion, and renovation initiatives such as Europe's Renovation Wave Strategy. High upfront costs remain a challenge, with heat pump installations ranging from $8,000 to $10,000 per unit, though government incentives are boosting demand. Heating equipment holds a 50% market share, with heat pumps playing a pivotal role in decarbonization. Western and Southern Europe account for over 53% of the market, while the Nordics are experiencing rapid growth.

Zacks Chief Strategist John Blank reports that the current AI infrastructure build-out has surpassed the peak of the late-1990s internet boom as a share of the total U.S. economy, with total private non-residential tech and telecom investment hovering around 5.5% to 6.0% of nominal U.S. GDP. Information processing equipment and software alone now account for 40% to 42% of all business capital expenditure. In the July sector outlook, Info Tech remains Very Attractive, with Cisco Systems highlighted as a Zacks number one rank strong buy. Industrials also stay at Very Attractive, featuring Johnson Controls International as a top pick, while Energy moves to Attractive from Very Attractive, led by Cenovus Energy. Blank cautions that both Info Tech and Industrials are overvalued and overdue for valuation corrections.

Citi analysts say persistently higher temperatures in Europe could create a significant long-term opportunity for U.S. HVAC manufacturers as demand for cooling systems rises. The bank noted that only around 20% of European households had air conditioning in 2018, compared with about 90% in the U.S. and Japan, and that increasingly frequent heatwaves may accelerate adoption. Carrier Global was identified as having the greatest exposure, with more than one-fifth of its revenue from its Climate Solutions Europe division, and it is the market leader in Europe's commercial HVAC sector. Citi also highlighted continued momentum in Carrier's European heat-pump business, where first-quarter sales rose by a low-teens percentage, and pointed to healthy demand indicated by German heat-pump subsidy applications. Trane Technologies and Johnson Controls, while generating a smaller share of revenue from Europe, are also seen as well positioned to benefit from greater investment in cooling technology and energy-efficient climate solutions.

Morgan Stanley raised its price target on Johnson Controls International to $175 from $140 while maintaining an Overweight rating, citing the company's increased multi-year organic growth target of high-single-digit growth announced at Gemba Day. Wolfe Research also increased its price target to $171 from $165 with an Outperform rating, noting progress in operational transformation through lean manufacturing initiatives. Johnson Controls provides HVAC and cooling infrastructure for high-density AI data centers.

On 27 June 2026, Johnson Controls International was added to several Russell Growth benchmarks, including the Russell 1000 Growth, Russell 3000 Growth, Russell 3000E Growth, and Russell Top 200 Growth indices. This broad inclusion may increase the company's visibility among growth-focused institutional investors and influence how the market assesses its role in building technologies and services. The addition highlights the market's focus on Johnson Controls as a growth name, though it does not materially change near-term catalysts such as Lean-driven margin improvement or risks around operational complexity. The company's February 2026 launch of new YORK and Silent Aire data center cooling solutions underscores its tie to fast-growing digital infrastructure, which remains linked to improving mix, backlog quality, and service attachment. Baseline projections see $30.1 billion in revenue and $4.1 billion in earnings by 2029, requiring 7.2% annual revenue growth and a $2.1 billion earnings increase from the current $2.0 billion.

Simply Wall St has raised its fair value estimate for Johnson Controls International to US$155.21 per share, up from US$138.11, reflecting higher revenue growth and margin assumptions. The revision incorporates analyst research highlighting the company's data center exposure, particularly in chillers, and early results from its operational revamp. Several firms, including UBS, Wolfe Research, and RBC Capital, have lifted their price targets, with Bernstein citing a possible sale or spin of parts of the fire and security business as a catalyst. However, BNP Paribas initiated coverage with a bearish stance, signaling that not all analysts share the optimistic outlook. The updated valuation assumes revenue growth of 7.17%, a net profit margin of 13.67%, and a forward P/E multiple of 24.39 times.

Two blue chip industrial stocks, Canadian National Railway and Johnson Controls, have pulled back slightly and may present buying opportunities. Canadian National Railway, which has a 19,500-mile North American network and a monopoly over Canada's port of Prince Rupert, saw a 1.5% decline for the week ending June 24 against a 17.3% year-to-date gain, while Johnson Controls, a building systems company with exposure to data center cooling, fell 1.6% over the past week but is up 19.3% this year. Canadian National is noted for its high-teens cash flow as a percentage of revenue and efficient operating model, having grown earnings per share by 7% last year despite a $350 million revenue hit from U.S. trade tariffs, with spending poised to decline by $500 million and ongoing share buybacks. Johnson Controls, founded in 1885, is benefiting from data center demand that is driving the bulk of its order growth in the Americas, contributing to a $20 billion backlog and leading management to raise 2026 earnings-per-share guidance to $4.85 from $4.55, while some analysts see potential value from selling or spinning off its fire and security unit.

StockStory highlights Johnson Controls and ATI as industrials stocks with durable advantages, while recommending investors avoid Autoliv. Johnson Controls, with a market cap of $87.86 billion, benefits from a 32.9% gross margin and share buybacks that boosted earnings per share growth. ATI, valued at $27.23 billion, posted 11.1% annual revenue growth over five years and expanded its free cash flow margin by 21.7 percentage points. Autoliv, a $9.67 billion passive safety systems maker, faces soft demand with estimated 1.5% revenue growth and a low 17.9% gross margin.