Jabil Beats Reduced Expectations

Jabil Circuit, Inc. (JBL - Analyst Report) announced results for the third quarter of fiscal 2008. Revenue for the quarter was $3,088.3 million, an increase of 2.9% from $3,001.9 million reported in the year-ago quarter. This was at the low-end of the company's guidance of $3.05 billion to $3.15 billion range. GAAP EPS in the quarter was $0.19 versus $0.03 in the comparable quarter last year. This was above company's guidance of $0.09 to $0.13 range.

For the fourth quarter of fiscal 2008, Jabil expects revenue in the range of $3.2 billion to $3.3 billion, with an estimated core operating margin range of 3.0% to 3.3%. Core EPS for its fourth quarter of fiscal 2008 is anticipated to be in a range of $0.29 to $0.33 range. Selling, general and administrative expenses are estimated to be approximately $118 million, research and development costs are expected to be approximately $9 million, and amortization of intangibles to be approximately $9 million.

Management also updated guidance for the full year 2008. It currently expects full-year revenue in the range of $12.7 billion to $12.8 billion, with core operating income in the range of $370 million to $385 million or 3.0% of revenue. Core EPS is expected in the $1.11 to $1.15 range.

Although Jabil has been showing signs of improvement from restructuring activities, the near-term risks of slowing end markets have prompted the company to issue disappointing revenue guidance for 2008. Given improvements in JBL's operations, we do believe that the stock should trade in-line with the industry median. Our price target of $15.00 reflects a multiple of 10.3x our 2009 estimated EPS of $1.45.

Read the full analyst report on JBL