Financial Analysis: Johnson Controls International (NYSE:JCI) & AZZ (NYSE:AZZ)

AZZ (NYSE:AZZ) and Johnson Controls International (NYSE:JCI) are both industrials companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, profitability and risk.

Profitability

This table compares AZZ and Johnson Controls International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AZZ	11.83%	14.18%	8.48%
Johnson Controls International	14.32%	22.11%	7.69%

Volatility & Risk

AZZ has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500. Comparatively, Johnson Controls International has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Earnings and Valuation

This table compares AZZ and Johnson Controls International”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AZZ	$1.65 billion	2.57	$317.26 million	$6.56	21.54
Johnson Controls International	$25.00 billion	3.47	$3.29 billion	$5.75	24.93

Johnson Controls International has higher revenue and earnings than AZZ. AZZ is trading at a lower price-to-earnings ratio than Johnson Controls International, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for AZZ and Johnson Controls International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AZZ	0	2	4	0	2.67
Johnson Controls International	1	10	12	0	2.48

AZZ presently has a consensus price target of $155.25, indicating a potential upside of 9.87%. Johnson Controls International has a consensus price target of $155.50, indicating a potential upside of 8.50%. Given AZZ’s stronger consensus rating and higher possible upside, analysts plainly believe AZZ is more favorable than Johnson Controls International.

Institutional & Insider Ownership

90.9% of AZZ shares are held by institutional investors. Comparatively, 90.1% of Johnson Controls International shares are held by institutional investors. 1.7% of AZZ shares are held by company insiders. Comparatively, 0.3% of Johnson Controls International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

AZZ pays an annual dividend of $0.96 per share and has a dividend yield of 0.7%. Johnson Controls International pays an annual dividend of $1.60 per share and has a dividend yield of 1.1%. AZZ pays out 14.6% of its earnings in the form of a dividend. Johnson Controls International pays out 27.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Johnson Controls International has increased its dividend for 4 consecutive years. Johnson Controls International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Johnson Controls International beats AZZ on 10 of the 17 factors compared between the two stocks.

About AZZ

AZZ Inc. provides hot-dip galvanizing and coil coating solutions in North America. It offers metal finishing solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing, and plating to steel fabrication and other industries, as well as to fabricators or manufacturers that provide services to the transmission and distribution, bridge and highway, petrochemical, and general industrial markets; and original equipment manufacturers. It also provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation, and air conditioning; container; transportation; and other end markets. The company was incorporated in 1956 and is headquartered in Fort Worth, Texas.

About Johnson Controls International

Johnson Controls International plc, together with its subsidiaries, engages in engineering, manufacturing, commissioning, and retrofitting building products and systems in the United States, Europe, the Asia Pacific, and internationally. It operates in four segments: Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific, and Global Products. The company designs, sells, installs, and services heating, ventilating, air conditioning, controls, building management, refrigeration, integrated electronic security, integrated fire detection and suppression systems, and fire protection and security products for commercial, industrial, retail, small business, institutional, and governmental customers. It also provides energy efficiency solutions and technical services, including inspection, scheduled maintenance, and repair and replacement of mechanical and control systems, as well as data-driven smart building solutions to non-residential building and industrial applications. In addition, the company offers control software and software services for residential and commercial applications. Johnson Controls International plc was incorporated in 1885 and is headquartered in Cork, Ireland.