Beating analysts' top- and bottom-line estimates, Johnson Controls (JCI 1.19%) reported second-quarter 2022 earnings before the market opened this morning. There were several bright spots in the building-automation specialist's report, yet investors seem to be focused more on management's forecast for the coming months -- not on the company's recent accomplishments.
As of 10:54 a.m. ET on Wednesday, shares of Johnson Controls were down 12.7%.
Generating revenue of $6.1 billion and adjusted earnings per share (EPS) of $0.63, Johnson Controls surpassed analysts' expectations for sales and adjusted EPS of $5.9 billion and $0.60, respectively.
While there was apparently a lot to celebrate in the earnings report, investors are focusing on the company's downwardly revised forecast for 2022. In its first-quarter 2022 earnings report, Johnson Controls had reaffirmed it would generate 2022 adjusted EPS of $3.22 to $3.32, representing a year-over-year increase of 22% to 25%. But due to a variety of headwinds (such as supply chain challenges and lockdowns in China), the company now believes that growth for the remainder of 2022 will be less robust than it had originally thought. Management now forecasts adjusted EPS of $2.95 to $3.05, a year-over-year gain of 11% to 15%.
Sure, a more-dour outlook on the remainder of 2022 is not what investors hoped to see from the company this morning, but it seems like the market is overreacting to the news instead of recognizing the more-auspicious figures such as the company's backlog.
Johnson Controls reported that its backlog has reached a company-record $10.9 billion. Headwinds could result in lower profitability for 2022, but a $10.9 billion backlog bodes well for the company's future, something that long-term investors should place greater emphasis on than a lower 2022 adjusted EPS forecast.