Earnings Preview: Jabil Circuit - Analyst Blog
December 16 2011 - 10:38AM
Zacks
Jabil Circuit Inc. (JBL) 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) and Sanmina-SCI
Corp. (SANM). 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.
FLEXTRONIC INTL (FLEX): Free Stock Analysis Report
JABIL CIRCUIT (JBL): Free Stock Analysis Report
SANMINA-SCI CP (SANM): Free Stock Analysis Report
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