Intrinsic value of Johnson Controls International - JCI

Previous Close

$36.99

  Intrinsic Value

$83.69

stock screener

  Rating & Target

str. buy

+126%

Previous close

$36.99

 
Intrinsic value

$83.69

 
Up/down potential

+126%

 
Rating

str. buy

We calculate the intrinsic value of JCI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 34.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  44.80
  40.82
  37.24
  34.01
  31.11
  28.50
  26.15
  24.04
  22.13
  20.42
  18.88
  17.49
  16.24
  15.12
  14.10
  13.19
  12.38
  11.64
  10.97
  10.38
  9.84
  9.35
  8.92
  8.53
  8.17
  7.86
  7.57
  7.31
  7.08
  6.87
Revenue, $m
  43,689
  61,523
  84,433
  113,152
  148,357
  190,641
  240,496
  298,302
  364,324
  438,716
  521,534
  612,749
  712,264
  819,934
  935,585
  1,059,031
  1,190,086
  1,328,583
  1,474,378
  1,627,365
  1,787,478
  1,954,694
  2,129,041
  2,310,594
  2,499,478
  2,695,868
  2,899,986
  3,112,101
  3,332,529
  3,561,628
Variable operating expenses, $m
  34,859
  48,010
  64,904
  86,082
  112,042
  143,222
  179,986
  222,612
  271,297
  326,155
  384,582
  451,845
  525,227
  604,624
  689,906
  780,935
  877,576
  979,704
  1,087,215
  1,200,028
  1,318,096
  1,441,402
  1,569,967
  1,703,845
  1,843,129
  1,987,948
  2,138,466
  2,294,881
  2,457,425
  2,626,364
Fixed operating expenses, $m
  2,591
  2,648
  2,706
  2,766
  2,826
  2,889
  2,952
  3,017
  3,083
  3,151
  3,221
  3,291
  3,364
  3,438
  3,514
  3,591
  3,670
  3,751
  3,833
  3,917
  4,004
  4,092
  4,182
  4,274
  4,368
  4,464
  4,562
  4,662
  4,765
  4,870
Total operating expenses, $m
  37,450
  50,658
  67,610
  88,848
  114,868
  146,111
  182,938
  225,629
  274,380
  329,306
  387,803
  455,136
  528,591
  608,062
  693,420
  784,526
  881,246
  983,455
  1,091,048
  1,203,945
  1,322,100
  1,445,494
  1,574,149
  1,708,119
  1,847,497
  1,992,412
  2,143,028
  2,299,543
  2,462,190
  2,631,234
Operating income, $m
  6,239
  10,865
  16,823
  24,305
  33,488
  44,530
  57,558
  72,672
  89,943
  109,410
  133,731
  157,613
  183,673
  211,872
  242,166
  274,505
  308,840
  345,128
  383,330
  423,420
  465,378
  509,200
  554,893
  602,475
  651,981
  703,456
  756,958
  812,558
  870,339
  930,394
EBITDA, $m
  13,714
  20,312
  28,804
  39,462
  52,540
  68,257
  86,800
  108,308
  132,880
  160,575
  191,413
  225,383
  262,449
  302,557
  345,642
  391,634
  440,464
  492,069
  546,397
  603,406
  663,073
  725,389
  790,365
  858,027
  928,424
  1,001,619
  1,077,697
  1,156,757
  1,238,916
  1,324,310
Interest expense (income), $m
  0
  733
  1,492
  2,495
  3,783
  5,397
  7,377
  9,754
  12,558
  15,808
  19,520
  23,703
  28,360
  33,488
  39,084
  45,138
  51,640
  58,581
  65,950
  73,737
  81,935
  90,537
  99,539
  108,941
  118,744
  128,953
  139,573
  150,615
  162,092
  174,019
  186,413
Earnings before tax, $m
  5,506
  9,373
  14,328
  20,522
  28,091
  37,153
  47,803
  60,115
  74,135
  89,890
  110,029
  129,254
  150,184
  172,789
  197,028
  222,865
  250,259
  279,178
  309,593
  341,485
  374,841
  409,661
  445,951
  483,731
  523,029
  563,883
  606,343
  650,466
  696,320
  743,981
Tax expense, $m
  1,487
  2,531
  3,869
  5,541
  7,585
  10,031
  12,907
  16,231
  20,017
  24,270
  29,708
  34,898
  40,550
  46,653
  53,198
  60,173
  67,570
  75,378
  83,590
  92,201
  101,207
  110,608
  120,407
  130,607
  141,218
  152,248
  163,713
  175,626
  188,006
  200,875
Net income, $m
  4,019
  6,842
  10,460
  14,981
  20,506
  27,122
  34,896
  43,884
  54,119
  65,620
  80,321
  94,355
  109,635
  126,136
  143,831
  162,691
  182,689
  203,800
  226,003
  249,284
  273,634
  299,052
  325,544
  353,124
  381,811
  411,635
  442,630
  474,840
  508,314
  543,106

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  75,067
  105,709
  145,074
  194,419
  254,908
  327,561
  413,223
  512,546
  625,986
  753,808
  896,107
  1,052,833
  1,223,821
  1,408,821
  1,607,535
  1,819,641
  2,044,822
  2,282,788
  2,533,296
  2,796,160
  3,071,268
  3,358,581
  3,658,146
  3,970,092
  4,294,636
  4,632,075
  4,982,793
  5,347,253
  5,725,995
  6,119,636
Adjusted assets (=assets-cash), $m
  75,067
  105,709
  145,074
  194,419
  254,908
  327,561
  413,223
  512,546
  625,986
  753,808
  896,107
  1,052,833
  1,223,821
  1,408,821
  1,607,535
  1,819,641
  2,044,822
  2,282,788
  2,533,296
  2,796,160
  3,071,268
  3,358,581
  3,658,146
  3,970,092
  4,294,636
  4,632,075
  4,982,793
  5,347,253
  5,725,995
  6,119,636
Revenue / Adjusted assets
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
Average production assets, $m
  48,320
  68,044
  93,383
  125,146
  164,083
  210,849
  265,988
  329,922
  402,942
  485,220
  576,817
  677,700
  787,764
  906,847
  1,034,757
  1,171,288
  1,316,235
  1,469,412
  1,630,662
  1,799,866
  1,976,950
  2,161,892
  2,354,719
  2,555,517
  2,764,423
  2,981,630
  3,207,384
  3,441,984
  3,685,777
  3,939,161
Working capital, $m
  -1,529
  -2,153
  -2,955
  -3,960
  -5,192
  -6,672
  -8,417
  -10,441
  -12,751
  -15,355
  -18,254
  -21,446
  -24,929
  -28,698
  -32,745
  -37,066
  -41,653
  -46,500
  -51,603
  -56,958
  -62,562
  -68,414
  -74,516
  -80,871
  -87,482
  -94,355
  -101,500
  -108,924
  -116,639
  -124,657
Total debt, $m
  27,626
  46,195
  70,050
  99,953
  136,610
  180,637
  232,548
  292,738
  361,482
  438,943
  525,176
  620,152
  723,770
  835,881
  956,301
  1,084,837
  1,221,297
  1,365,505
  1,517,312
  1,676,608
  1,843,323
  2,017,435
  2,198,971
  2,388,011
  2,584,684
  2,789,173
  3,001,708
  3,222,570
  3,452,088
  3,690,634
Total liabilities, $m
  45,491
  64,060
  87,915
  117,818
  154,475
  198,502
  250,413
  310,603
  379,347
  456,808
  543,041
  638,017
  741,635
  853,746
  974,166
  1,102,702
  1,239,162
  1,383,370
  1,535,177
  1,694,473
  1,861,188
  2,035,300
  2,216,836
  2,405,876
  2,602,549
  2,807,038
  3,019,573
  3,240,435
  3,469,953
  3,708,499
Total equity, $m
  29,576
  41,650
  57,159
  76,601
  100,434
  129,059
  162,810
  201,943
  246,638
  297,000
  353,066
  414,816
  482,185
  555,076
  633,369
  716,938
  805,660
  899,418
  998,119
  1,101,687
  1,210,079
  1,323,281
  1,441,309
  1,564,216
  1,692,086
  1,825,038
  1,963,221
  2,106,818
  2,256,042
  2,411,136
Total liabilities and equity, $m
  75,067
  105,710
  145,074
  194,419
  254,909
  327,561
  413,223
  512,546
  625,985
  753,808
  896,107
  1,052,833
  1,223,820
  1,408,822
  1,607,535
  1,819,640
  2,044,822
  2,282,788
  2,533,296
  2,796,160
  3,071,267
  3,358,581
  3,658,145
  3,970,092
  4,294,635
  4,632,076
  4,982,794
  5,347,253
  5,725,995
  6,119,635
Debt-to-equity ratio
  0.930
  1.110
  1.230
  1.300
  1.360
  1.400
  1.430
  1.450
  1.470
  1.480
  1.490
  1.500
  1.500
  1.510
  1.510
  1.510
  1.520
  1.520
  1.520
  1.520
  1.520
  1.520
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
Adjusted equity ratio
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,019
  6,842
  10,460
  14,981
  20,506
  27,122
  34,896
  43,884
  54,119
  65,620
  80,321
  94,355
  109,635
  126,136
  143,831
  162,691
  182,689
  203,800
  226,003
  249,284
  273,634
  299,052
  325,544
  353,124
  381,811
  411,635
  442,630
  474,840
  508,314
  543,106
Depreciation, amort., depletion, $m
  7,475
  9,447
  11,981
  15,158
  19,051
  23,728
  29,242
  35,635
  42,937
  51,165
  57,682
  67,770
  78,776
  90,685
  103,476
  117,129
  131,624
  146,941
  163,066
  179,987
  197,695
  216,189
  235,472
  255,552
  276,442
  298,163
  320,738
  344,198
  368,578
  393,916
Funds from operations, $m
  11,494
  16,290
  22,441
  30,139
  39,558
  50,849
  64,138
  79,519
  97,056
  116,785
  138,003
  162,125
  188,411
  216,820
  247,307
  279,820
  314,313
  350,741
  389,069
  429,271
  471,329
  515,242
  561,016
  608,675
  658,253
  709,798
  763,369
  819,039
  876,891
  937,022
Change in working capital, $m
  -473
  -624
  -802
  -1,005
  -1,232
  -1,480
  -1,745
  -2,023
  -2,311
  -2,604
  -2,899
  -3,193
  -3,483
  -3,768
  -4,048
  -4,321
  -4,587
  -4,847
  -5,103
  -5,355
  -5,604
  -5,853
  -6,102
  -6,354
  -6,611
  -6,874
  -7,144
  -7,424
  -7,715
  -8,018
Cash from operations, $m
  11,967
  16,914
  23,243
  31,144
  40,790
  52,329
  65,883
  81,542
  99,367
  119,389
  140,901
  165,318
  191,894
  220,589
  251,354
  284,141
  318,900
  355,588
  394,172
  434,625
  476,933
  521,094
  567,118
  615,030
  664,864
  716,671
  770,513
  826,463
  884,606
  945,041
Maintenance CAPEX, $m
  -3,337
  -4,832
  -6,804
  -9,338
  -12,515
  -16,408
  -21,085
  -26,599
  -32,992
  -40,294
  -48,522
  -57,682
  -67,770
  -78,776
  -90,685
  -103,476
  -117,129
  -131,624
  -146,941
  -163,066
  -179,987
  -197,695
  -216,189
  -235,472
  -255,552
  -276,442
  -298,163
  -320,738
  -344,198
  -368,578
New CAPEX, $m
  -14,947
  -19,724
  -25,338
  -31,763
  -38,936
  -46,766
  -55,140
  -63,934
  -73,020
  -82,278
  -91,597
  -100,883
  -110,063
  -119,083
  -127,910
  -136,531
  -144,947
  -153,177
  -161,250
  -169,204
  -177,084
  -184,941
  -192,828
  -200,797
  -208,906
  -217,207
  -225,754
  -234,600
  -243,793
  -253,384
Cash from investing activities, $m
  -18,284
  -24,556
  -32,142
  -41,101
  -51,451
  -63,174
  -76,225
  -90,533
  -106,012
  -122,572
  -140,119
  -158,565
  -177,833
  -197,859
  -218,595
  -240,007
  -262,076
  -284,801
  -308,191
  -332,270
  -357,071
  -382,636
  -409,017
  -436,269
  -464,458
  -493,649
  -523,917
  -555,338
  -587,991
  -621,962
Free cash flow, $m
  -6,317
  -7,642
  -8,900
  -9,958
  -10,661
  -10,845
  -10,341
  -8,990
  -6,646
  -3,184
  782
  6,753
  14,061
  22,729
  32,759
  44,134
  56,824
  70,788
  85,981
  102,355
  119,862
  138,458
  158,102
  178,760
  200,407
  223,022
  246,595
  271,125
  296,615
  323,080
Issuance/(repayment) of debt, $m
  14,054
  18,569
  23,855
  29,903
  36,656
  44,028
  51,911
  60,190
  68,744
  77,460
  86,233
  94,976
  103,618
  112,110
  120,421
  128,536
  136,460
  144,208
  151,808
  159,296
  166,715
  174,112
  181,536
  189,040
  196,673
  204,488
  212,535
  220,862
  229,518
  238,546
Issuance/(repurchase) of shares, $m
  5,110
  5,231
  5,050
  4,461
  3,326
  1,504
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  19,164
  23,800
  28,905
  34,364
  39,982
  45,532
  51,911
  60,190
  68,744
  77,460
  86,233
  94,976
  103,618
  112,110
  120,421
  128,536
  136,460
  144,208
  151,808
  159,296
  166,715
  174,112
  181,536
  189,040
  196,673
  204,488
  212,535
  220,862
  229,518
  238,546
Total cash flow (excl. dividends), $m
  12,847
  16,158
  20,004
  24,407
  29,322
  34,686
  41,570
  51,200
  62,099
  74,276
  87,016
  101,729
  117,679
  134,839
  153,180
  172,670
  193,283
  214,995
  237,789
  261,651
  286,577
  312,570
  339,638
  367,800
  397,080
  427,510
  459,131
  491,987
  526,132
  561,626
Retained Cash Flow (-), $m
  -9,129
  -12,073
  -15,509
  -19,442
  -23,833
  -28,625
  -33,751
  -39,133
  -44,695
  -50,362
  -56,066
  -61,750
  -67,369
  -72,890
  -78,293
  -83,570
  -88,721
  -93,759
  -98,700
  -103,569
  -108,392
  -113,201
  -118,029
  -122,907
  -127,870
  -132,951
  -138,183
  -143,597
  -149,224
  -155,095
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  151
  218
  308
  422
  566
  742
  953
  1,202
  1,492
  1,822
  2,194
  2,608
  3,064
  3,561
  4,100
  4,678
  5,295
  5,950
  6,643
  7,372
  8,137
  8,937
  9,773
  10,645
  11,553
  12,497
  13,479
  14,500
  15,561
  16,663
Cash available for distribution, $m
  3,717
  4,085
  4,495
  4,964
  5,489
  6,061
  7,819
  12,066
  17,403
  23,915
  30,950
  39,979
  50,310
  61,949
  74,886
  89,100
  104,562
  121,237
  139,089
  158,082
  178,185
  199,368
  221,609
  244,893
  269,210
  294,559
  320,948
  348,390
  376,908
  406,531
Discount rate, %
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
  3,426
  3,443
  3,436
  3,411
  3,357
  3,267
  3,674
  4,887
  6,001
  6,930
  7,433
  7,842
  7,936
  7,730
  7,263
  6,594
  5,791
  4,922
  4,051
  3,227
  2,489
  1,858
  1,341
  936
  631
  410
  257
  155
  90
  50
Current shareholders' claim on cash, %
  87.1
  78.8
  73.5
  70.3
  68.5
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9
  67.9

Johnson Controls International plc operates as a diversified technology and multi industrial company worldwide. The company operates through Buildings and Power Solutions segments. It designs, produces, markets, and installs heating, ventilating, and air conditioning (HVAC) systems, building management systems, controls, and security and mechanical equipment. The company also provides residential air conditioning and heating systems, and industrial refrigeration products, as well as technical and energy management consulting services. In addition, it designs, sells, installs, services, and monitors electronic security systems, and fire detection and suppression systems; and manufactures and sells intrusion security products, anti-theft devices, breathing apparatus, and access control and video management systems for commercial, industrial, retail, residential, small business, institutional, and governmental customers. Further, the company produces and supplies lead-acid automotive batteries for passenger cars, light trucks, and utility vehicles, as well as advanced battery technologies to power start-stop, hybrid, and electric vehicles. It offers its lead-acid automotive batteries to automotive original equipment manufacturers and the general vehicle battery aftermarket. The company was formerly known as Johnson Controls, Inc. and changed its name to Johnson Controls International plc in September 2016. Johnson Controls International plc was founded in 1885 and is headquartered in Cork, Ireland.

FINANCIAL RATIOS  of  Johnson Controls International (JCI)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

JCI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JCI stock intrinsic value calculation we used $30172 million for the last fiscal year's total revenue generated by Johnson Controls International. The default revenue input number comes from 2017 income statement of Johnson Controls International. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our JCI stock valuation model: a) initial revenue growth rate of 44.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.5%, whose default value for JCI is calculated based on our internal credit rating of Johnson Controls International, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Johnson Controls International.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of JCI stock the variable cost ratio is equal to 82.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2535 million in the base year in the intrinsic value calculation for JCI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Johnson Controls International.

Corporate tax rate of 27% is the nominal tax rate for Johnson Controls International. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the JCI stock is equal to 0.5%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for JCI are equal to 110.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Johnson Controls International operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for JCI is equal to -3.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $20447 million for Johnson Controls International - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 932 million for Johnson Controls International is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Johnson Controls International at the current share price and the inputted number of shares is $34.5 billion.

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COMPANY NEWS

▶ Johnson Controls sells downtown Milwaukee land to hotel developers for $5.1M   [Aug-10-18 03:07PM  American City Business Journals]
▶ Johnson Controls: Fiscal 3Q Earnings Snapshot   [08:08AM  Associated Press]
▶ 1 Hot Long-Term Trend to Invest In   [07:34AM  Motley Fool]
▶ 7 Alternative Internet of Things Stocks to Buy   [Jul-17-18 10:28AM  InvestorPlace]
▶ GE's stock leads industrial sector to broad gains   [Jul-06-18 02:16PM  MarketWatch]
▶ Celtic Tiger Roars Again: 4 Irish Picks   [Jun-28-18 08:22AM  Zacks]
▶ Johnson Controls spinoff Adient scraps plans to move HQ to Detroit   [Jun-25-18 05:31PM  American City Business Journals]
▶ United Way of Greater Milwaukee & Waukesha County set $56M fundraising goal   [Jun-21-18 04:00PM  American City Business Journals]
▶ Why I Like Johnson Controls International plc (NYSE:JCI)   [Jun-17-18 09:58AM  Simply Wall St.]
▶ Jean S. Blackwell elected to board of Johnson Controls   [Jun-13-18 09:30AM  PR Newswire]
▶ Johnson Controls Is an Attractive Investment Opportunity   [May-28-18 06:33AM  Morningstar]
▶ Industrials Value Stocks Investors Love   [May-12-18 12:02PM  Simply Wall St.]
▶ Johnson Controls Power Solutions adds two new contracts amid strategic review   [May-09-18 03:51PM  American City Business Journals]
▶ Power Solutions strategic review still ongoing, Johnson Controls CEO says   [May-02-18 05:55PM  American City Business Journals]
▶ Johnson Controls breaks into China with significant e-commerce partnership   [Apr-25-18 04:07PM  American City Business Journals]
▶ Johnson Controls opens highly automated chiller testing facility in Pennsylvania   [Apr-23-18 06:11PM  American City Business Journals]
▶ Johnson Controls Slashes Bonus for CEO Over Affair   [Apr-20-18 02:51PM  The Wall Street Journal]
▶ Johnson Controls names new top communications officer   [Apr-10-18 11:46AM  American City Business Journals]
▶ Johnson Controls buys Nashville tech firm   [03:34PM  American City Business Journals]
▶ Johnson Controls announces quarterly dividend   [Mar-07-18 10:00AM  PR Newswire]
▶ United Technologies Among The Stocks Most At Risk From Trump Tariffs   [Mar-05-18 04:12PM  Investor's Business Daily]
▶ Why Johnson Controls Is Worth $45   [Mar-02-18 03:39PM  Forbes]
▶ Amazon's Ring Deal May Threaten These Security Competitors   [Feb-28-18 05:02PM  Investor's Business Daily]
▶ David Herro's Picks in the Fourth Quarter   [Feb-27-18 05:01PM  GuruFocus.com]
▶ Best Growth Stock in February   [Feb-24-18 01:02AM  Simply Wall St.]
▶ New Tax Law Haunts Companies That Did Inversion Deals   [Feb-11-18 07:00AM  The Wall Street Journal]
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