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Jabil Circuit Inc. (JBL - Analyst Report) is set to announce its fiscal first quarter 2012 results on Tuesday, December 20, after the closing bell. In the run up to the earnings results, we did not notice a substantial movement in analysts’ estimates for the quarter.

Prior Quarter Highlights

The company reported fourth quarter 2011 earnings of 54 cents per share, beating the Zacks Consensus Estimate by a nickel.

Earnings per share (EPS) increased 81.9% from 30 cents (including stock-based compensation but excluding amortization) reported in the year-ago quarter. The strong results were primarily driven by solid top-line growth and operating margin expansion in the quarter. Moreover, a decline in operating expenses helped the bottom-line.

Full details are available on: Jabil Beats on Lower Cost

Current Quarter Expectations

For the first quarter of 2012, Jabil expects net revenue in the range of $4.3 billion to $4.5 billion. The Zacks Consensus Estimate has the quarter’s revenues at $4.41 billion, in the middle of the guided range.

Diversified Manufacturing is expected to be up 3.0% sequentially, Enterprise and Infrastructure is anticipated to remain flat year over year, while High Velocity is forecasted to increase 6.0% on a sequential basis in the first quarter.

For the quarter, Jabil forecasts operating income (excluding stock-based compensation) in the $185.0 million to $205.0 million range (4.3% to 4.5% of the total revenue). Jabil expects non-GAAP earnings per share to be between 62 cents and 70 cents. At the time of the fourth quarter 2011 earnings release, the Zacks Consensus Estimate for Jabil was 55 cents, which was significantly lower than the guided range.

Estimation Revisions Trend

Over the past 30 days, two of the seven analysts covering the stock revised their estimates upward for the quarter, while none lowered their estimates. Nonetheless, the Zacks Consensus Estimate for the first quarter stayed at 58 cents per share. Analysts’ estimates range from 57 cents to 61 cents.

Analysts believe that increasing adoption of clean technology and alternative energy will provide Jabil the growth momentum. Moreover, the lean cost structure, increasing cash flow generation capabilities and an improving balance sheet are positives going forward.

Our Take

Jabil exceeded the analysts’ estimates in three of the preceding four quarters, while it failed to beat the estimates once. The average surprise in these four quarters is a positive 5.28%, and another positive earnings surprise is expected from the company.

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, an expanding global business and an improving balance sheet are positives for the stock.

However, we believe that the volatile macro environment in Europe will remain an overhang on the stock in the near term. The company also faces competition from Flextronics International Ltd (FLEX - Snapshot Report) and Sanmina-SCI Corp. (SANM - Snapshot Report). We maintain a Neutral rating on Jabil over the long term (6–12 months).

Currently, Jabil has a Zacks #2 Rank, which implies a Buy rating on a short-term basis.

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