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Jabil (JBL) to Report Q3 Earnings: What's in the Cards?

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Jabil (JBL - Free Report) is set to report third-quarter fiscal 2021 results on Jun 17.

For third-quarter fiscal 2021, Jabil expects total revenues between $6.6 billion and $7.2 billion, suggesting an increase of 9% on a year-over-year basis at the midpoint of the range.

Moreover, the company’s core earnings are expected between 90 cents and $1.10 per share on a non-GAAP basis.

The Zacks Consensus Estimate for earnings has been unchanged at $1.03 over the past 30 days, indicating growth of 178.3% year over year. The consensus mark for revenues is pegged at $6.9 billion, indicating growth of 8.98% from the year-ago quarter’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, the average surprise being 29.4%.

Let’s see how things have shaped up for this announcement.

Jabil, Inc. Price and EPS Surprise

Factors to Watch

Jabil’s fiscal third-quarter results are expected to reflect contract wins in healthcare, connected devices, cloud and 5G. Moreover, improving end-market diversification is a key catalyst.

Diversified Manufacturing Services (DMS) revenues are forecast to be $3.5 billion, up roughly 19% year over year. The DMS segment is likely to have benefited from an improved business mix, driven by Jabil’s impressive diversification efforts.

Notably, Jabil’s $5-billion healthcare and packaging solutions have witnessed strong adoption from healthcare, medical device and consumer packaged goods companies globally.

On Mar 4, Jabil Healthcare, a division of Jabil announced that it has entered into a strategic collaboration agreement with global drug delivery device company E3D, a member of the Elcam Medical Group, which gives Jabil access to E3D’s reusable mechanical auto-injector. Per the terms of this deal, Jabil has secured exclusive rights to develop a high-volume reusable auto-injector and connected variants.

Additionally, the expansion of Jabil’s sustainable packaging offerings with the acquisition of Ecologic Brands in the fiscal second quarter bodes well for its DMS segment and is expected to have aided top-line growth.

Moreover, in the to-be reported quarter, Jabil’s Packaging Solutions division launched a connected packaging platform that enables Consumer Packaged Goods (CPG) companies to offer their customers a compelling next-generation user experience that maximizes convenience and boosts brand loyalty. The new platform combines sensors, connectivity and cloud technologies to eliminate reorder friction for consumer staples.

Electronics Manufacturing Services (EMS) revenues are forecast to be $3.4 billion, which indicates an increase of 1% year over year. Solid demand for the company’s 5G wireless and cloud computing services is expected to have aided growth in the EMS segment.

Moreover, the company is expected to have benefited from the growing traction in its mobility and connected devices business induced by pandemic-led remote working and learning environment in the to-be-reported quarter.

However, the company’s variable cost is expected to have remained elevated due to business-interruption costs in China and other parts of the world in the to-be-reported quarter.

Key Developments in Q3

During the fiscal third quarter, Jabil announced the availability of a patent-pending, innovative new additive material, Jabil PA 0600, which delivers the high strength and stiffness required for demanding aerospace, automotive and industrial manufacturing applications.

On Apr 22, Jabil announced that its board of directors declared a quarterly dividend of 8 cents per share, to be paid out to shareholders on Jun 2, 2021.

Moreover, Jabil announced expansion plans for newly acquired paper bottle technology with a $25-million investment in subsidiary Ecologic’s Manteca, California location and the buildout of a new paper bottle plant in its Sustainability Center of Excellence in Tortosa, Spain. This expansion will create the first paper-based scaled technology in the market, as Jabil delivers Ecologic’s innovative pulp molding capabilities to new geographies and enables production of hundreds of millions of new paper packages.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Jabil has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With a Favorable Combination

Here are some stocks you may consider, as according to our proven model, these have the right mix of elements to beat estimates this time around.

FedEx Corporation (FDX - Free Report) has an Earnings ESP of +4.45% and is #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills, Inc. (GIS - Free Report) presently has an Earnings ESP of +2.06% and a Zacks Rank of 3.

CarMax, Inc. (KMX - Free Report) currently has an Earnings ESP of +5.00% and a Zacks Rank of 3.

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