Can Johnson Controls, Inc (JCI) Shake off European Worries?

Industry cues
One thing to remember is that Johnson Controls, Inc (NYSE:JCI) isn’t the only conglomerate struggling on the continent. Honeywell International Inc. (NYSE:HON), which competes with the company’s building efficiency business, has been hurt by weak industrial demand there as well. The company has also been forced to restructure core businesses and focus on growth markets. A successful first quarter helped Honeywell boost guidance and approach 52-week highs, while Johnson Controls, Inc (NYSE:JCI) simply met expectations. Darn.

Major global auto suppliers Magna International Inc. (USA) (NYSE:MGA) and Lear Corporation (NYSE:LEA) have been obvious targets for a depressed European market. Both companies cited a 6% slide in Old World auto production in 2012 as the dominating factor keeping sales revenue down. Meanwhile, production in North America and China were up 17% and 7%, respectively. The pleasant pickup in production and the reemergence of the American automobile industry has aided auto sales for the two companies. That and a focus on non-auto markets has led each company to its best earnings in years.

Foolish bottom line
Will Johnson Controls, Inc (NYSE:JCI) be able to shake the dead weight from Europe? It doesn’t look like that will happen any time soon, but it may not matter. Sure, it only met expectations in its most recent quarter. But if Magna International Inc. (USA) (NYSE:MGA) and Lear Corporation (NYSE:LEA) can profit from the worldwide auto market, then the company should be able to meet its efficiency targets. Looking around the industry shows that two things are more important than slowing industrial activity in the Old World: diversification and growth markets. Good news for investors: Johnson Controls, Inc (NYSE:JCI) is cruising in both categories.

The article Can Johnson Controls Stock Shake off European Worries? originally appeared on Fool.com and is written by Maxx Chatsko.

Motley Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool recommends Ford. The Motley Fool owns shares of Ford.

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