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Source: Johnson Controls.

Opportunities abound for investors looking to gain exposure to the Internet of Things. From blue chip to micro cap, the choices can be overwhelming; nonetheless, fortune favors the bold. So let's dauntlessly dig in and take a look at a familiar name in industrials: Johnson Controls (NYSE:JCI).

Get smart
Johnson Controls operates in three segments: building efficiency, automotive experience, and power solutions. Of these segments, Johnson Controls applies its Internet of Things know-how to improve building efficiency through building automation, and it does so with its Metasys Building Automation System. Enabling HVAC, lighting, and security systems to communicate with each other, Metasys offers compatibility with both Johnson Controls systems and those from other manufacturers. In addition to the Building Automation System, Johnson Controls offers the Metasys Enterprise Optimization solution. Consisting of a number of applications, Metasys Enterprise Optimization collects and analyzes building data to help customers increase energy efficiency and reduce costs. 

Through Metasys and other offerings, Johnson Controls has significant exposure to the smart-building market -- a market expected to experience significant growth in the coming years. According to Navigant Research, revenue from building energy management systems is expected to reach $2.4 billion in 2015 and grow to $10.8 billion by 2024.

Making green by going green
The movement to improve building efficiency affords Johnson Controls a tremendous growth opportunity; however, the interest in smart buildings is already having a positive effect on the company's earnings. For the fourth quarter of FY '15, Johnson Controls reported $2.9 billion in net revenue for the building-efficiency segment. That's the same amount it reported in the fourth quarter of FY '14, however, but this is a case where looks can be deceiving. Because of its operations in foreign markets, the strong dollar has adversely affected and misrepresented the company's earnings. Adjusting for foreign exchange, the company recognized a 5% improvement in net revenue year over year. In terms of segment income, building efficiency reported a 3% gain year over year, excluding foreign exchange that jumps to 8%. 

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Of the company's three operating segments, building efficiency was the only one that didn't report a decline year over year. Net revenue for the automotive-experience and power-solutions segments declined 21% and 6%, respectively. 

Looking toward the future, the company's backlog declined by 1%. However, management contends that it's placing less emphasis on a growing backlog as a sign of the segment's success. Following the acquisition of Air Distribution Technologies in 2014 and the participation in a joint venture with Hitachi, management argues that it is more of a "products business" and not a "projects/backlog business."

Potential risk
In its 10-K, Johnson Controls acknowledges that material risks for the company include the conditions of the residential and commercial new-construction markets. Since the company's building-efficiency segment relies heavily on sales of HVAC equipment, it's important for spending in these markets to grow. Though the past five years have seen rises in construction spending -- the commercial sector is up 69% and residential is up 56% -- the past year has seen a partial slowdown.
US Commercial Construction Spending Chart

US Commercial Construction Spending data by YCharts

Though the residential sector is continuing to rise, spending in the commercial sector is waning. Whether this is temporary or an indication of a longer-trend remains to be seen. Nonetheless, it's something to keep an eye on.

The outlook
Featuring its Metasys control system, Johnson Controls is at the forefront of using machine-to-machine communication to reduce energy costs in residential and commercial buildings. And though the building-efficiency segment accounted for only 33% of the company's consolidated net sales in 2014, that figure is likely to grow as the demand for building automation develops. Johnson Controls is definitely not a pure play in the Internet of Things, but the Metasys solution provides the company with ample opportunity to benefit. This may be just the amount of exposure some investors may be looking for in this burgeoning market, and if it is, this should only be the beginning of their research.

Scott Levine has no position in any stocks mentioned. The Motley Fool owns shares of Johnson Controls, Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.