Shares of Jabil Circuit, Inc. (NYSE: JBL – $24.89) jumped in early trading this morning after the provider of electronic manufacturing services reported stronger than expected profit and revenue for its fiscal first quarter. Although adjusted earnings decreased to $0.69 in the three months ended Nov. 30, from $0.85 a year earlier, the figure topped the $0.64 average estimate of analysts. Revenue for the period dropped to $5.1 billion from $5.21 billion year-over-year, but also topped the analyst consensus of $4.91 billion. Results were bolstered by stronger-than-projected results from its diversified manufacturing services segment, which includes contracting work from Apple. Nearly half of Jabil’s revenue comes from five customers, rendering the Florida-based company vulnerable to the tech market’s ups and downs. Apple, which in October reported its first annual profit and revenue decline since 2001, accounted for 24% of its revenue for the past two years.
The electronics supplier expects to make $0.35 to $0.57 a share in adjusted profit on $4.2 billion to $4.5 billion in revenue in the second quarter, compared with analysts’ projections of $0.46 a share on $4.36 billion in revenue. While the shares have under-performed the market since inclusion in the aggressive portfolio a year ago, longer term, I believe this issue offers above average price appreciation potential out to 2019-2021.