Electronics manufacturing services and solutions provider Jabil, Inc. (NYSE: JBL – $27.59) reported revenue for the second period was 1.1% better than Street views at $6.1 billion and well-above last year’s $5.3 billion. The Diversified Manufacturing Services segment year-on-year revenue decreased 7% and its Electronics Manufacturing Services business posted a year-on-year revenue growth of 33%. Adjusted earnings per share tallied at $0.64 vs. $.66 last year, but three cents ahead of analysts’ consensus. During the quarter, Jabil successfully transitioned the first two sites from Johnson & Johnson Medical Devices Companies as part of the previously announced strategic collaboration between the companies. For the third fiscal quarter, management is estimating revenue of between $5.7 billion and $6.3 billion – about a 10% increase from last year – which includes a decrease of 12% in Diversified Manufacturing and a 27% increase in Electronics Manufacturing Services’ revenue. Management is also forecasting $0.47 – $0.67 per share earnings next quarter bracketing the consensus of $0.57.
The current valuation of 9.3 times estimated full-year 2019 earnings is below the company’s long-term average. Also, a reduced share count and solid organic growth should lift share net above $4.00 over the next several years. Thus long-term capital appreciation potential is attractive, although not assured given this highly cyclical business.