Building operations company Johnson Controls (NYSE: JCI) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 6.8% year on year to $5.80 billion. Its non-GAAP profit of $0.89 per share was 5.7% above analysts’ consensus estimates.

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"Johnson Controls delivered a strong start to the year, with solid revenue growth, meaningful margin expansion, and adjusted EPS up nearly 40%, reflecting improving execution across the enterprise," said Joakim Weidemanis, CEO.

Company Overview

Founded after patenting the electric room thermostat, Johnson Controls (NYSE: JCI) specializes in building products and technology solutions, including HVAC systems, fire and security systems, and energy storage.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Johnson Controls’s 8.3% annualized revenue growth over the last five years was decent. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Johnson Controls’s recent performance shows its demand has slowed as its annualized revenue growth of 3.5% over the last two years was below its five-year trend.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Johnson Controls’s organic revenue averaged 5.8% year-on-year growth. Because this number is better than its two-year revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results.

This quarter, Johnson Controls reported year-on-year revenue growth of 6.8%, and its $5.80 billion of revenue exceeded Wall Street’s estimates by 2.8%.

Looking ahead, sell-side analysts expect revenue to grow 5% over the next 12 months, similar to its two-year rate. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.

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Operating Margin

Johnson Controls’s operating margin has been trending up over the last 12 months and averaged 9% over the last five years. Its profitability was higher than the broader industrials sector, showing it did a decent job managing its expenses.

Analyzing the trend in its profitability, Johnson Controls’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Johnson Controls generated an operating margin profit margin of 14.7%, up 5.6 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Johnson Controls’s EPS grew at a remarkable 12% compounded annual growth rate over the last five years, higher than its 8.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Johnson Controls’s earnings to better understand the drivers of its performance. A five-year view shows that Johnson Controls has repurchased its stock, shrinking its share count by 15.5%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Johnson Controls, its two-year annual EPS growth of 9.7% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q4, Johnson Controls reported adjusted EPS of $0.89, up from $0.64 in the same quarter last year. This print beat analysts’ estimates by 5.7%. Over the next 12 months, Wall Street expects Johnson Controls’s full-year EPS of $4.02 to grow 19%.

Key Takeaways from Johnson Controls’s Q4 Results

We were impressed by how significantly Johnson Controls blew past analysts’ EBITDA expectations this quarter. We were also glad its organic revenue outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 8.5% to $134.49 immediately following the results.

Johnson Controls had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).