What Happened?

Shares of building operations company Johnson Controls (NYSE:JCI) jumped 12% in the morning session after the company reported strong first-quarter results, with organic revenue growing 10% year-on-year, exceeding analysts' expectations​. This was driven by a 16% increase in orders and an 11% rise in its Building Solutions backlog. Looking ahead, its EPS guidance for next quarter came in higher than Wall Street's estimates. Zooming out, we think this was a good quarter with some key areas of upside.

Is now the time to buy Johnson Controls? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Johnson Controls’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. Moves this big are rare for Johnson Controls and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 6 months ago when the stock gained 9.2% on the news that the company reported second-quarter earnings results, with EPS exceeding analysts' estimates. Full-year EPS guidance was also ahead of expectations. 

On the other hand, its revenue unfortunately missed. Strategically, the company "announced divestitures of our R&LC HVAC and Air Distribution Technologies businesses, representing roughly 20% of sales, marking a pivotal milestone in our transformation into a pure-play provider of comprehensive solutions for commercial buildings and is a significant step to unlock value for our shareholders." Overall, this quarter was still solid.

Johnson Controls is up 9.9% since the beginning of the year, and at $86.77 per share, has set a new 52-week high. Investors who bought $1,000 worth of Johnson Controls’s shares 5 years ago would now be looking at an investment worth $2,180.

Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.