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Will Revenue Contraction Hinder Jabil's (JBL) Q4 Earnings?
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Jabil Inc. (JBL - Free Report) is scheduled to report its fourth-quarter fiscal 2023 results on Sep 28, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 5.85%. It pulled off a trailing four-quarter earnings surprise of 5.47%, on average.
The leading global supplier of electronic manufacturing services is likely to witness a top-line contraction year over year in the fourth quarter of fiscal 2023. Despite efforts to improve the financial foundation and drive innovation in core verticals, weak demand trends in some consumer-facing markets, and macroeconomic uncertainty are likely to impact the top-line growth.
Factors at Play
During the quarter, Jabil has introduced two cutting edge servers — the J312-S 1U and J322-S 2U — designed to support time-sensitive, low latency fintech and cloud computing applications. The servers are powered by 4th Gen Intel Xeon Scalable processors that ensure data integrity and drive energy efficiency. Additionally, the integrated air-cooling system reduces installation costs compared to other liquid cooling options.
Jabil’s “Design to Dust” strategy empowers customers with comprehensive product lifecycle management. The servers also offer support for a wide array of network adapters, accelerators and drive slots. These advanced features, coupled with high configurability, allow clients to effectively address specific fintech workloads and scale up to match future requirements. This is likely to have supported the top line during the quarter.
In the fiscal fourth quarter, Jabil announced that it has inked a definitive agreement with China-based BYD Electronic (International) Company Limited to divest its Mobility business to focus more on its core businesses. The transaction, valued at about $2.2 billion, is slated to be the largest of its kind by the company, if concluded. The divestment will enable Jabil to enhance its financial flexibility and will facilitate the company to invest more in electric vehicles (EVs), renewable energy, healthcare, AI cloud data centers and other end markets to strengthen its position as one of the largest global suppliers of electronic manufacturing services. This is likely to be reflected in the upcoming results.
However, management continues to keep a cautious approach, owing to the persistence of macroeconomic headwinds. Jabil expects weak demand trends in semi-cap and some consumer-facing markets will likely hurt net sales. Intense competition in both domestic and international electronic manufacturing services is weighing on margins. Geopolitical tension between the United States and China may impact its operations in the region.
Our revenue estimate for the DMS vertical is pegged at $4,288.3 million, indicating a decline from the $4,424.7 million reported in the year-ago quarter. Per our estimate, revenues from the EMS vertical are pegged at $4,205 million, down 8.7% year over year.
For the to-be-reported quarter, the Zacks Consensus Estimate for revenues is pegged at $8,498 million, which indicates a decline from the year-ago quarter’s reported figure of $9,030 million. The consensus estimate for earnings is pegged at $2.31, suggesting a decrease from $2.34 reported in the prior year quarter.
Earnings Whispers
Our proven model doesn’t conclusively predict an earnings beat for Jabil this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $2.31. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Jefferies Financial Group Inc. (JEF - Free Report) stands at +8.82%. The company carries a Zacks Rank of 3. It is scheduled to report quarterly numbers on Sep 27.
The Earnings ESP for Conagra Brands, Inc. (CAG - Free Report) stands at +0.87% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 5.
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Will Revenue Contraction Hinder Jabil's (JBL) Q4 Earnings?
Jabil Inc. (JBL - Free Report) is scheduled to report its fourth-quarter fiscal 2023 results on Sep 28, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 5.85%. It pulled off a trailing four-quarter earnings surprise of 5.47%, on average.
The leading global supplier of electronic manufacturing services is likely to witness a top-line contraction year over year in the fourth quarter of fiscal 2023. Despite efforts to improve the financial foundation and drive innovation in core verticals, weak demand trends in some consumer-facing markets, and macroeconomic uncertainty are likely to impact the top-line growth.
Factors at Play
During the quarter, Jabil has introduced two cutting edge servers — the J312-S 1U and J322-S 2U — designed to support time-sensitive, low latency fintech and cloud computing applications. The servers are powered by 4th Gen Intel Xeon Scalable processors that ensure data integrity and drive energy efficiency. Additionally, the integrated air-cooling system reduces installation costs compared to other liquid cooling options.
Jabil’s “Design to Dust” strategy empowers customers with comprehensive product lifecycle management. The servers also offer support for a wide array of network adapters, accelerators and drive slots. These advanced features, coupled with high configurability, allow clients to effectively address specific fintech workloads and scale up to match future requirements. This is likely to have supported the top line during the quarter.
In the fiscal fourth quarter, Jabil announced that it has inked a definitive agreement with China-based BYD Electronic (International) Company Limited to divest its Mobility business to focus more on its core businesses. The transaction, valued at about $2.2 billion, is slated to be the largest of its kind by the company, if concluded. The divestment will enable Jabil to enhance its financial flexibility and will facilitate the company to invest more in electric vehicles (EVs), renewable energy, healthcare, AI cloud data centers and other end markets to strengthen its position as one of the largest global suppliers of electronic manufacturing services. This is likely to be reflected in the upcoming results.
However, management continues to keep a cautious approach, owing to the persistence of macroeconomic headwinds. Jabil expects weak demand trends in semi-cap and some consumer-facing markets will likely hurt net sales. Intense competition in both domestic and international electronic manufacturing services is weighing on margins. Geopolitical tension between the United States and China may impact its operations in the region.
Our revenue estimate for the DMS vertical is pegged at $4,288.3 million, indicating a decline from the $4,424.7 million reported in the year-ago quarter. Per our estimate, revenues from the EMS vertical are pegged at $4,205 million, down 8.7% year over year.
For the to-be-reported quarter, the Zacks Consensus Estimate for revenues is pegged at $8,498 million, which indicates a decline from the year-ago quarter’s reported figure of $9,030 million. The consensus estimate for earnings is pegged at $2.31, suggesting a decrease from $2.34 reported in the prior year quarter.
Earnings Whispers
Our proven model doesn’t conclusively predict an earnings beat for Jabil this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $2.31. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Jabil, Inc. Price and EPS Surprise
Jabil, Inc. price-eps-surprise | Jabil, Inc. Quote
Zacks Rank: Jabil currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Paychex, Inc. (PAYX - Free Report) is set to release its quarterly numbers on Sep 27. It has an Earnings ESP of +0.09% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Jefferies Financial Group Inc. (JEF - Free Report) stands at +8.82%. The company carries a Zacks Rank of 3. It is scheduled to report quarterly numbers on Sep 27.
The Earnings ESP for Conagra Brands, Inc. (CAG - Free Report) stands at +0.87% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 5.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.