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Jabil Reports Strong Results; Announces Share Buyback

Jabil, Inc. (NYSE: JBL – $33.17) – the St. Petersburg, Fla., maker of electronic components – reported adjusted earnings of $0.88 a share compared to $0.70 in last year’s fourth quarter. Analysts were expecting $0.87. Fiscal fourth period revenue increased to $6.57 billion from $5.77 billion but trailed the analyst consensus of $6.63 billion. For the full-year, Diversified Manufacturing Services (DMS) revenue grew 2% while the Electronics Manufacturing Services (EMS) segment year-on-year revenue growth was up 23%. For the first quarter, JBL is anticipating revenue in the range of $6.65 billion to $7.35 billion on an increase in DMS revenue of 3% and EMS revenue growth of 11%. It is forecasting adjusted earnings of $0.82 to $1.04 per share, which brackets Street views of $0.93. As part of a two-year capital allocation framework, Jabil’s Board of Directors has authorized a share repurchase program of up to $600 million in stock.

       The company is broadening its revenue pool by diversification, which should enhance long-term top line growth while reducing customer concentration risk. It is aiming for no single product, or product family, to represent more than 4% of operating income in a given fiscal year. Management is also targeting a big push in the cloud arena, healthcare, 5G wireless and automotive end markets.

       Following the earnings and repurchase announcement, shares of Jabil are trading higher by about 6% sending the stock to a mufti-year high. Even so, they hold an inexpensive valuation and long-term capital appreciation potential remains above average.

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