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JBL Gains From Robust Supply Chain Network: Will it Drive Growth?

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Key Takeaways

  • Jabil's supply chain network helps it navigate geopolitical tensions and trade challenges.
  • The company will invest $500M in the Southeast U.S. to expand the AI hardware supply chain.
  • JBL stock is up 66% in a year, trading at 18.94 forward earnings versus the industry's 24.75.

Jabil Inc. (JBL - Free Report) is benefiting from its strong supply chain network. Over the last few years, growing geopolitical unrest in several parts of the world has significantly impacted the supply chains of multiple companies. Wars in Eastern Europe and the situation in the Middle East have often disrupted supply chains, forcing suppliers to change their shipment delivery routes, leading to higher expenses. This supply instability often led to a situation where either the company faced supply shortages of critical components, ultimately causing client dissatisfaction, or held excess inventory. High inflation, expenses and inventory challenges put pressure on margin.

Moreover, trade-related uncertainties, tariffs and sanctions under the current administration in U.S. also aggravated the supply chain issue. Amid this backdrop, the major organizations worldwide are aiming to source their components from suppliers who are more resilient to these threats. Jabil has a strong presence more than 25 countries worldwide. The company’s worldwide connected factory network enables it to scale production according to evolving market dynamics.

Its multi-region presence has boosted its reliability to its customers. Jabil is focusing on localizing its manufacturing units to cater to regional demands. It is set to invest $500 million over the next several years in the Southeast U.S. region. This strategic investment will strengthen Jabil’s position in the AI hardware supply chain.

How Are Competitors Faring?

Jabil faces stiff competition from Celestica, Inc. (CLS - Free Report) and Flex Ltd. (FLEX - Free Report) . With a presence across 16 countries worldwide, Celestica’s diversified manufacturing network and resilient supply chain are effectively mitigating the effects of geopolitical volatility and tariff-related uncertainties. The company is expanding capacity and capabilities at its facilities in Richardson, United States, Thailand and Malaysia to support the growing demand for its industry-leading AI data center products. Efficient inventory management is also a major component of Celestica’s supply chain resilience.

Flex’s global manufacturing scale is one of its most significant competitive advantages. The company operates more than 49 million square feet globally, including 7 million square feet in the United States and 9 million in Mexico, giving it one of the largest advanced manufacturing footprints in North America. Flex is focusing on localized manufacturing to boost resilience across its supply chain.

JBL’s Price Performance, Valuation and Estimates

Jabil has gained 66% in the past year compared with the Electronic-Manufacturing Services industry’s growth of 120.4%.

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Image Source: Zacks Investment Research

Going by the price/earnings ratio, its shares currently trade at 18.94 forward earnings, lower than 24.75 for the industry.

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Image Source: Zacks Investment Research

The company’s earnings estimate for 2025 has increased over the past 60 days.

Zacks Investment Research
Image Source: Zacks Investment Research

Jabil carries a Zacks Rank #4 (Sell) at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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