Earnings Preview: Jabil Circuit - Analyst Blog
September 24 2012 - 5:30AM
Zacks
Jabil Circuit Inc.
(JBL) is scheduled to release its fiscal fourth quarter 2012
results after the closing bell on September 25, 2012. In the run up
to the earnings results, we did not notice any substantial movement
in analysts’ estimates for the quarter.
Prior Quarter
Highlights
Jabil reported a tepid third
quarter, wherein both top line and bottom line missed the Zacks
Consensus Estimate due to sluggish end-market sales, particularly
in the high-velocity segment. The company also suffered from
weakness in the solar industry. Moreover, management had also
provided a dismal outlook for the fourth quarter.
For further details please read:
Jabil Misses in 3Q; Outlook Dismal
Estimates Revision
Trend
Over the past 30 days, only one out
of the six analysts covering the stock made a downward revision,
while no upward revision was noticed. Thus, the Zacks Consensus
Estimate for the fourth quarter dropped by a cent to 50 cents per
share over the same period. Analysts’ estimates range from 44 cents
to 53 cents.
Jabil has a paltry positive average
earnings surprise of 0.29%, as it has failed to beat the Zacks
Consensus Estimate in three out of the four preceding quarters.
Analysts covering the stock expect a tepid quarter due to
lower-than-expected iPhone sales and weakness from Research
In Motion Ltd. (RIMM) to negatively impact the company’s
top line.
Our Take
Jabil is expected to benefit from
strong growth in the Mobility, Aerospace and Defense, Healthcare,
Instrumentation and Industrial, Clean Tech, Networking and Storage
segments over the long term. Moreover, expansion of global business
and strategic acquisitions are positives for the stock.
We believe that Jabil is well
positioned to grow over the long term, driven by increasing
exposure to non-traditional and emerging sectors such as
industrial, renewable energy, clean tech and medical, aided by
improving technology spending. Moreover, increasing production
capacity in the low-cost regions of China will boost profitability
going forward.
However, the company faces strong
competition from Flextronics International Ltd
(FLEX) and Sanmina-SCI Corp. (SANM), which along
with the high debt level and sluggish economic conditions in Europe
and the U.S. are the near-term headwinds going forward.
Thus, we remain Neutral over the
long term (6-12 months). Currently, Jabil has a Zacks #2 Rank,
which implies a Buy rating in the near term.
FLEXTRONIC INTL (FLEX): Free Stock Analysis Report
JABIL CIRCUIT (JBL): Free Stock Analysis Report
RESEARCH IN MOT (RIMM): Free Stock Analysis Report
SANMINA-SCI CP (SANM): Free Stock Analysis Report
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