One of the investment and corporate finance topics that has been getting more airtime recently is the notion of “peak margins” - the idea that many (if not most) companies have squeezed all they can from mass firings, IT investments, and other sorts of cost “rationalizations”. If this theory proves accurate, stocks could well be meaningfully overpriced on the basis of margin expansion expectations that just won't materialize.
That could be a relevant topic in the case of Johnson Controls (NYSE:JCI), as sell-side analysts continue to project margin improvements well ahead of historical experience. Certainly there are reasons to think that this company could be near a point of margin inflection – the building efficiency business should be close to turning and the company may be ready to start reaping better returns from batteries as well. That said, betting on a significant transformation at a company with a record of underwhelming performance could be a risky bet.
Please read more here:
http://www.investopedia.com/stock-analysis/050713/johnson-controls-has-lot-improving-left-do-jci-itw-lea-utx-si.aspx
Investopedia: Johnson Controls Has A Lot Of Improving Left To Do
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