Categories Analysis, Technology

Earnings preview: Jabil needs to undo the declines

Electronics manufacturing company Jabil Inc (JBL) is scheduled to report first-quarter earnings on Tuesday, December 18, after the closing bell. Analysts expect the company to post earnings of 88 cents per share on a revenue of $6.05 billion.

During the same period last year, the company had reported earnings of 80 cents per share and a revenue of $5.6 billion.

JBL shares are currently trading down 30% from its 52-week high of $31.37, primarily pulled down by the bears,  despite better-than-expected fourth quarter results.

During the fourth quarter, the company reported a 15% increase in net revenue to $5.77 billion. Meanwhile, core earnings grew to 70 cents from 64 cents a year ago.

The company has so far been able to keep cost increases from playing spoilsport on the operating income. During Q4, operating income jumped 30% to $154 million. However, quite a few stock critics believe margins are going to get affected in the years to come and hence investors should remain cautious.

Jabil Circuit Q4 earnings top estimates; stock gains

Meanwhile, with a PE ratio of 16, the stock seems cheaper compared to many peer firms. If the company makes use of its proficiency in automation – a key area in the technology sector – to its advantage, the stock may see some steady gains in the future.

Jabil has a 12-month average price target of $29, suggesting a 33% upside from its current trading price. Three out of six analysts covering the stock recommend to HOLD the stock. Two others recommend BUY, while one has a SELL rating.

 

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