Johnson Controls: Secular Tailwinds Support Growth and Margin Expansion; Shares Undervalued

Narrow-moat-rated Johnson Controls has transformed over the last decade, shedding its automotive exposure and expanding its commercial building products portfolio with the addition of Tyco’s fire and security businesses. Now, roughly 45% of revenue is tied to commercial heating, ventilation, and air conditioning and 40% is from fire and security. Residential HVAC, industrial refrigeration, and other solutions account for roughly 15% of revenue.