Johnson Controls International plc (JCI) intends to resume its previously-announced share-buyback program with effect from the fourth quarter of fiscal 2020. The program relates to the deployment of proceeds from the sale of Power Solutions transaction.
Johnson Controls has already suspended its existing share-buyback program and withdrew the 2020 guidance to increase the company’s immediate liquidity resources in response to disruptions caused to the supply chain due to the coronavirus crisis.
As of Mar 31, 2020, the company had about $735 million available under its previously-announced share-repurchase program for fiscal 2020 and $3.1 billion available under its overall share-repurchase authorization.
Johnson Controls can buy shares in the open market or through a variety of methods, as permitted by applicable securities laws and other legal requirements, when implementing the share-repurchase program. There is no obligation to repurchase any particular amount of shares within any time frame. Further, its authorization to repurchase shares has no fixed expiry date, and may be modified, suspended or terminated at any time at the discretion of the firm without prior notice.
Meanwhile, in response to the uncertainty caused by the coronavirus pandemic, the company has initiated a series of costs-saving initiatives throughout the enterprise, including substantial staffing adjustments and reduction in production levels to help mitigate the business disruption. The focus on cost discipline is likely to result into potential annualized run-rate savings of around $400-$450 million.
The company now projects fiscal 2020 organic revenues to be down 15-20%. Weak consumer sentiment amid the pandemic is likely to hurt the firm's sales and earnings in the near future.
Zacks Rank & Stocks to Consider
Johnson Controls currently carries a Zacks Rank #3 (Hold). Shares of the company have depreciated 15.4%, year to date, compared with the industry’s decline of 13%.
Some better-ranked stocks in the same sector are Tesla, Inc. TSLA, Halfords Group Plc HLFDY and Niu Technologies NIU. While Tesla and Halfords sport a Zacks Rank of 1 (Strong Buy), Niu carries a Zack Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Tesla have soared 123.6%, year to date, compared with the industry’s rise of 34.4%.
Shares of Halfords have gained 7.5%, year to date, as against the industry’s decline of 14%.
Shares of Niu have gained 36.3%, year to date, as against the industry’s decline of 14%.
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