Market Overview

Raymond James: Jabil Faces A Tough Environment, But Is Focusing On The Right Metrics


Jabil Inc (NYSE: JBL) reported disappointing revenue in its fiscal second-quarter earnings release.

The company’s guidance implies an improvement in capital equipment, which has already played out, and this could result in full-year 2019 estimates being modestly reduced.

The Analyst

Raymond James’ Adam Tindle maintains a Market Perform rating on Jabil.

The Thesis

For the Diversified Manufacturing Services (DMS) segment, Jabil reported an 8 percent year-on-year decline in its quarterly revenue to $2.3 billion, missing the estimate by around $345 million, Tindle said.

Despite weaker revenue, the company delivered a higher-than-expected operating profit of $102 million. “This can be considered impressive evidence the diversification strategy is resulting in more stable earnings,” Tindle wrote in a note.

He added that this performance could continue into the back half of 2019 as profit is expected to grow 6-7 percent year-on-year on largely flat revenue.

Revenue for full-year 2019 is now expected to be $10 billion, a $300-million decrease from prior guidance.

The EMS segment delivered a revenue beat at $3.8 billion, although operating margins declined and missed expectations.

While the company is facing a tough mobility cycle, Tindle said the focus is on the right forward metrics, which would improve its business profile.

Share Action

Jabil fell 1.3 percent to $27.06 per share.

Related Links:

A Peek Into The Markets: US Stock Futures Edge Lower Ahead Of Earnings, Economic Data

Earnings Scheduled For March 14, 2019

Latest Ratings for JBL

Jul 2020Goldman SachsUpgradesNeutralBuy
Jun 2020CitigroupMaintainsBuy
Jun 2020RBC CapitalMaintainsSector Perform

View More Analyst Ratings for JBL
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