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Will Jabil Circuit (JBL) Q2 Earnings Pull Off a Surprise?
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Jabil Circuit Inc (JBL - Free Report) is slated to release second-quarter fiscal 2017 results on Mar 15 after the closing bell. Last quarter, the company delivered stronger-than-expected results with a positive earnings surprise of 18.97%. Jabil Circuit has delivered an average positive earnings surprise of 45.61% in the trailing four quarters.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Jabil continues to gain from fast growing sectors like industrial, renewable energy, clean tech and medical. Moreover, the increase in technology spending bodes well for Jabil’s top line. Though the company’s realignment program will have an adverse effect on its financial position over the next two years, it will eventually boost its growth and market share.
On the other hand, Jabil’s Diversified Manufacturing Services (DMS) segment suffered owing to weakness in demand for Apple Inc.’s (AAPL - Free Report) iPhone. However, with the success of iPhone 7 & and 7 Plus, the performance of the DMS segment should improve. Apple continues to be Jabil’s leading customer, accounting for nearly 24% of its total revenue.
Nonetheless, escalating market competition and macroeconomic headwinds continue to be concerns.
For the second quarter, Jabil expects total company net revenue to decrease 1% (at mid point) year over year and be in the range of $4.2 billion to $4.5 billion. Core operating income is estimated in a range of $125 million to $165 million.
On a year-over-year basis, revenues from Diversified Manufacturing are expected to decrease 2% to $1.7 billion, given softness in the mobility business. Electronics Manufacturing Services revenues of $2.65 billon are expected to be flat on a year-over-year basis. Core earnings are expected to be in the range of 35 cents to 57 cents per share.
The company expects GAAP earnings in the range of a loss of 18 cents to earnings of 18 cents.
Earnings Whisper
Our proven model does not conclusively show that Jabil is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Jabil currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 36 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Jabil’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Caleres, Inc. (CAL - Free Report) with an Earnings ESP of +5.00% and a Zacks Rank #2.
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Will Jabil Circuit (JBL) Q2 Earnings Pull Off a Surprise?
Jabil Circuit Inc (JBL - Free Report) is slated to release second-quarter fiscal 2017 results on Mar 15 after the closing bell. Last quarter, the company delivered stronger-than-expected results with a positive earnings surprise of 18.97%. Jabil Circuit has delivered an average positive earnings surprise of 45.61% in the trailing four quarters.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Jabil continues to gain from fast growing sectors like industrial, renewable energy, clean tech and medical. Moreover, the increase in technology spending bodes well for Jabil’s top line. Though the company’s realignment program will have an adverse effect on its financial position over the next two years, it will eventually boost its growth and market share.
On the other hand, Jabil’s Diversified Manufacturing Services (DMS) segment suffered owing to weakness in demand for Apple Inc.’s (AAPL - Free Report) iPhone. However, with the success of iPhone 7 & and 7 Plus, the performance of the DMS segment should improve. Apple continues to be Jabil’s leading customer, accounting for nearly 24% of its total revenue.
Nonetheless, escalating market competition and macroeconomic headwinds continue to be concerns.
For the second quarter, Jabil expects total company net revenue to decrease 1% (at mid point) year over year and be in the range of $4.2 billion to $4.5 billion. Core operating income is estimated in a range of $125 million to $165 million.
On a year-over-year basis, revenues from Diversified Manufacturing are expected to decrease 2% to $1.7 billion, given softness in the mobility business. Electronics Manufacturing Services revenues of $2.65 billon are expected to be flat on a year-over-year basis. Core earnings are expected to be in the range of 35 cents to 57 cents per share.
The company expects GAAP earnings in the range of a loss of 18 cents to earnings of 18 cents.
Earnings Whisper
Our proven model does not conclusively show that Jabil is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Jabil currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 36 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Jabil’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Caleres, Inc. (CAL - Free Report) with an Earnings ESP of +5.00% and a Zacks Rank #2.
DSW Inc. with an Earnings ESP of +6.25% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates and spending surges in defense and infrastructure. See these buy recommendations now >>