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Johnson Controls Weighing Options for Power Solutions Unit


Johnson Controls International plc JCI announced to mull over strategic alternatives for the Power Solutions unit that produces advanced battery technology solutions for vehicles. The Cork, the Ireland-based diversified technology company is weighing on alternatives for the Power Solutions business to emphasize more on its core products of building technology.

Notably, Johnson Controls functions through two segments – Building Technologies & Solutions and Power Solutions. Its high-margin Power Solutions unit is a leading player in meeting increasing electrification needs in vehicles. In 2017, Power Solutions generated revenues of $7.3 billion with 24% share in total revenues. However, the Power Solutions unit, which offers advanced battery technology along with systems engineering, marketing and service expertise, is capital intensive in nature and requires a huge amount of investment.

Over the next several months, Johnson Controls intends to explore strategic options for the Power Solutions unit. No time has been specified for this strategic move and the consummation of any deal is subject to the approval of the company’s board of directors.

However, the company outperformed the industry it belongs to in last six months. Its shares have lost 3% whereas the industry plunged 23%.

Johnson Controls currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

A few better-ranked stocks in the auto space are General Motors Company GM, Volkswagen AG VLKAY and AB Volvo VLVLY. While both General Motors and Volkswagen sport a Zacks Rank #1, AB Volvo carries a Zacks Rank #2 (Buy).

General Motors has an expected long-term growth rate of 8.4%. Past year, shares of the company rose 2.3%.

Volkswagen has an expected long-term growth rate of 18.7%. The shares of the company gained 29.2% in the past year.

AB Volvo has an expected long-term growth rate of 15%. Past year, shares of the company rallied 32.6%.

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