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Jabil Stock In Buy Zone As Earnings Growth Explodes For Supplier To Tesla, Apple, Others

As a contract manufacturer, Jabil (JBL) serves as the factory for a range of products, from wearable devices to 5G networking gear. Jabil stock, today’s IBD 50 Stocks To Watch pick, is in a favorable spot, too.




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St. Petersburg, Fla.-based Jabil has operations in 30 countries. It provides manufacturing services for 5G infrastructure, electric vehicles, health care, cloud computing, clean energy and environmentally friendly packaging.

It is a supplier to Tesla (TSLA), Apple (AAPL), Johnson & Johnson (JNJ) and other key companies, FactSet data shows. The health care segment includes a range of industries itself, such as diagnostics, pharmaceuticals and medical devices.

Executives see secular trends in strategically important markets, including health care, autos, connected devices, 5G and cloud computing. All those are showing strong performance that goes beyond the fiscal year just ended in August, the company says.

Like other manufacturers, Jabil faces supply chain problems. CEO Mark Mondello says he expects those headwinds to continue into early 2022, and in some cases could extend into the summer of 2022. But Mondello says Jabil has done a good job in terms of bulk purchases and locking in prices on raw commodities.

Jabil Stock Earns Top EPS Rating

Jabil’s earnings growth continues to impress. The rate of EPS increases accelerated from 11% in the August 2020 quarter to 52%, 154% and 251% the next few quarters. No wonder Jabil stock has the best EPS Rating of 14 companies in its industry group. Sales growth also accelerated but remained in low double digits: 11%, 4%, 11% and 14%. Its exceptional growth was one reason Jabil stock was on IBD Leaderboard from May to June.

In its June 17 earnings report, the company raised its outlook for the fiscal full-year that concluded Aug. 31. It forecast revenue “in the neighborhood” of $29.5 billion, with EPS of about $5.50. It also forecast sales of $7.3 billion to $7.9 billion for the August-ended quarter, and quarterly earnings of $1.25 to $1.45 a share.

Jabil management also kept its forecast of 4.2% for core operating margin and raised its outlook for free cash flow by 5% to $630 million.

Analysts expect Jabil to earn $1.38 a share in fiscal Q4 (up 41%) on sales of $7.67 billion (up 5%), according to FactSet. For the full year ended in August, the consensus estimate is $5.55 a share in earnings (up 92%) with sales of $29.55 billion, an increase of 8%.

Jabil Stock In Buy Zone

Jabil stock broke out of a flat base July 29 and made moderate progress from the 59.05 buy point, according to MarketSmith pattern recognition. Since then, Jabil pulled back to the 10-week moving average, and rebounded. Support at that level created a follow-on buy area from about 58.70 to 64.55. Shares traded around 62 on Wednesday.

From a breakout to new highs it set last October, Jabil stock has already more than doubled. The most recent base was third stage, so expectations for big stock gains should be tempered.

Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia

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