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Jabil Circuit Inc. (JBL - Free Report) reported mixed third-quarter fiscal 2017 results wherein the bottom line missed the Zacks Consensus Estimate by a penny while the top line surpassed the same. Adjusted earnings (excluding all other one-time items but including stock-based compensation) of 21 cents per share lagged the Zacks Consensus Estimate of 22 cents. However, on a year-on-year basis earnings jumped over two-folds.

However, revenues of $4.49 billion outpaced the Zacks Consensus Estimate of $4.41 billion and were higher than the prior-year quarter’s figure of $4.31 billion.

The company delivered approximately $114 million in core operating income resulting in core earnings per share of 31 cents. Core operating margin was 2.5%, representing a 50 basis points (bps) improvement year over year.

Following an improved year-over-year quarterly results, Jabil Circuit’s shares gained 3.3% in the yesterday’s afterhours trading session. Notably, shares of Jabil Circuit have outperformed the Zacks Electronics Manufacturing Services industry in the last one year. While the industry gained 38.6%, the stock appreciated 63.1%.

Electronics manufacturing services revenues (representing 63% of revenues) came in at about $2.82 billion, down 1% year over year. Diversified Manufacturing Services revenues (37% of revenues) increased 14% year over year to $1.67 billion.

Operating Details

Gross margin contracted nearly 10 bps on a year-over-year basis to 7.3%.

The company’s operating income decreased 27.2% year on year to $43.4 million.

Jabil Circuit, Inc. Price, Consensus and EPS Surprise

Jabil Circuit, Inc. Price, Consensus and EPS Surprise | Jabil Circuit, Inc. Quote

Balance Sheet & Cash Flow

The company exited the quarter with cash and cash equivalents of $743.9 million, compared with $912.1 million as of Aug 31, 2016.

Cash flow from operations for the first nine months of the year was $533 million compared with $488.2 million in the year-ago period.

Restructuring Program

The company continued with its plans to realign its global capacity and administrative support infrastructure so as to optimize organizational effectiveness amid a sluggish macroeconomic scenario. The company is progressing with efforts to improve organizational efficiency and effectiveness as planned. The company incurred approximately $31 million of restructuring charges in the third quarter with approximately $110 million in charges year to date.


The company provided guidance for fourth-quarter fiscal 2017.

For the fourth quarter, Jabil expects total company revenue to increase 11% (at mid point) year on year and in the range of $4.7–$5.1 billion. Core operating income is estimated in the range of $165–$215 million.

Diversified Manufacturing Services revenues are forecasted to grow 26% year over year.

Electronics Manufacturing Services revenues are anticipated to improve moderately at 2% on a year-on-year basis.

On a GAAP basis, the company expects to report diluted earnings in a range of 13–48 cents per share. Meanwhile, the company is expected to post earnings in the range of 50–74 cents per share on a non-GAAP basis.

Currently, Jabil Circuit carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the broader tech space include Applied Optoelectronics, Inc. (AAOI - Free Report) , Amkor Technology, Inc. (AMKR - Free Report) and Broadcom Ltd. (AVGO - Free Report) . Applied Optoelectronics sports a Zacks Rank #1 (Strong Buy) while Amkor Technology and Broadcom carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Optoelectronics has delivered an average positive earnings surprise of 118.33% in the trailing four quarters while Amkor Technology and Broadcom have delivered positive earnings surprises of 43.06% and 6.73%, respectively over the same time frame.

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