The rapid rise in urbanization and population is driving the need for sustainable and efficient city management, spurring the growth of the smart city market. Emerging technologies like IoT, AI, and machine learning are further enhancing city infrastructure, making smart cities more viable and efficient.
Given this trend, investing in key smart city stocks such as Johnson Controls International plc (JCI), Itron, Inc. (ITRI), and American Superconductor Corporation (AMSC) could be a smart move in driving urban modernization.
Governments are investing in smart city initiatives, including public-private partnerships, to tackle urban challenges like energy efficiency, waste management, and transportation. The U.S. Department of State’s $3 million Smart Cities Business Innovation Fund 2.0 supports MSMEs in ASEAN in developing carbon-neutral solutions, driving financing, infrastructure growth, and new business opportunities.
Also, growing concerns over pollution, waste, and energy consumption are fueling the adoption of smart solutions like smart grids and renewable energy management, with smart utility solutions, including energy and waste management, gaining traction due to rising energy demand. The global smart cities market is projected to grow from $767.75 billion in 2024 to $4.65 trillion by 2032, with a CAGR of 25.2%.
Given these conducive trends, let’s analyze the fundamental aspects of the three smart city stocks mentioned above.
Johnson Controls International plc (JCI)
Headquartered in Cork, Ireland, JCI and its subsidiaries engage in engineering, manufacturing, commissioning, and retrofitting building products and systems in the United States, Europe, the Asia-Pacific, and internationally. It operates through four segments: Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia-Pacific, and Global Products.
On November 12, 2024, JCI announced expanded AI capabilities in its OpenBlue Enterprise Manager, including generative AI tools, enhanced autonomous building controls, and an improved user experience. These updates aim to boost energy efficiency, operational automation, and sustainability, paving the way for smarter, more responsive buildings.
In terms of the trailing-12-month EBIT margin, JCI’s 10.71% is 2.9% higher than the 10.41% industry average. Likewise, its 7.43% trailing-12-month net income margin is 13.8% higher than the 6.53% industry average. Furthermore, its 35.19% trailing-12-month gross profit margin is 9% higher than the 32.28% industry average.
In the fiscal fourth quarter that ended on September 30, JCI’s net sales increased 6.4% year-over-year to $4.39 billion. The company’s gross profit rose 15% from the prior year’s quarter to $2.27 billion. Its adjusted net income attributable to JCI was $858 million, or $1.28 per share, reflecting increases of 19.3% and 21.9% year-over-year, respectively.
For the quarter ending December 31, 2024, JCI’s EPS is expected to increase 16.7% year-over-year to $0.60. Its revenue for fiscal 2026 is expected to grow 4.8% year-over-year to $24.71 billion. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 59.8% to close the last trading session at $83.71.
JCI’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Momentum. Within the A-rated Industrial – Services industry, it is ranked #43 out of 81 stocks. To see JCI’s Growth, Value, Stability, Sentiment, and Quality ratings, click here.
Itron, Inc. (ITRI)
ITRI is a technology, solutions, and services company that provides end-to-end solutions to help manage energy, water, and smart city operations worldwide. It operates through three segments: Device Solutions, Networked Solutions, and Outcomes.
On November 13, 2024, ITRI and PG&E announced the EV Connect program, a pilot initiative using edge computing to make EV charging more accessible and affordable by eliminating costly panel upgrades. The program will initially support 1,000 residential customers and launch in early 2025.
On November 6, 2024, ITRI announced integrating its Intelligent Connectivity suite with FirstNet, providing utilities and cities with secure, prioritized communication for critical infrastructure. This collaboration enhances connectivity reliability, especially during emergencies, supporting mission-critical Industrial IoT use cases.
In terms of the trailing-12-month EBIT margin, ITRI’s 10.64% is 103% higher than the 5.24% industry average. Its 12.92% trailing-12-month EBITDA margin is 26.9% higher than the 10.18% industry average. Additionally, its 6.70% trailing-12-month Return on Total Assets is 250.5% higher than the 1.91% industry average.
For the third quarter ended September 30, 2024, ITRI's total revenue increased 9.8% year-over-year to $615.46 million, while operating income rose 33.8% year-over-year to $78.97 million. Additionally, its non-GAAP net income attributable to ITRI and non-GAAP EPS increased by 87.7% and 87.8% to $84.25 million and $1.84, respectively, compared to the prior-year quarter.
Analysts expect ITRI’s revenue for the quarter ending December 31, 2024, to increase 4.7% year-over-year to $604.56 million. Its EPS for fiscal 2024 is expected to increase 57.9% year-over-year to $5.31. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 79.3% to close the last trading session at $119.29.
It’s no surprise that ITRI has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Sentiment and Quality. Within the Industrial – Services industry, it is ranked #12. Beyond what we stated above, we also have given ITRI grades for Growth, Value, Momentum, and Stability. Get all ITRI ratings here.
American Superconductor Corporation (AMSC)
AMSC and its subsidiaries provide megawatt-scale power resiliency solutions worldwide. The company operates through its Grid and Wind segments.
On August 5, 2024, AMSC announced its acquisition of NWL, Inc., a provider of power supplies for industrial and military customers, for $25 million in cash and stock valued at $31.40 million. The acquisition aims to expand AMSC’s product offerings, enhance its military footprint, and accelerate profitable growth.
During the third quarter ended September 30, 2024, AMSC’s total revenues increased by 60.2% year-over-year to $54.47 million. Likewise, the company’s non-GAAP net income rose significantly year-over-year to $9.95 million, or $0.27 per share.
Street expects AMSC’s EPS and revenue for the quarter ending December 31, 2024, to increase 122.2% and 44% year-over-year to $0.07 and $56.67 million, respectively. Over the past year, AMSC’s stock has gained 261.7% to close the last trading session at $32.37.
AMSC’s positive outlook is reflected in its POWR Ratings. It has an A grade for Growth and a B for Sentiment. It is ranked #55 out of 89 stocks in the Industrial - Equipment industry. To access AMSC’s rating for Value, Momentum, Stability, and Quality, click here.
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JCI shares were trading at $83.71 per share on Thursday morning, down $0.04 (-0.05%). Year-to-date, JCI has gained 47.58%, versus a 27.18% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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