Thursday night, my hometown boys at Jabil Circuit (NYSE:JBL) report third-quarter earnings. Clearwater, Fla., feels more distant than usual today -- since I'm stranded in Guatemala until further notice -- but here's a taste of the Gulf Coast for you anyway.

What analysts say:

  • Buy, sell, or waffle? Twenty-six analysts follow Jabil, with 17 hold ratings on the stock and nine buyers. In our own Motley Fool CAPS database, it's a two-star stock these days, based on ratings from 135 out of the more than 30,000 ranked players.
  • Revenue. The average forecast calls for $2.96 billion, 14% more than the year-ago figure. The management guidance range goes from $2.9 billion to $3.0 billion.
  • Earnings. But the bottom line is expected to shrink from $0.36 per share last year to $0.21 per share this time around. The company's own non-GAAP forecast covers a lot of ground -- $0.11 to $0.29 per share, to be precise. Or not.

What management says:
These guys aren't saying much, and for good reason. More on that after the raw numbers.

What management does:
Gross margin was never fat to begin with, but it's now looking positively minuscule. That's bad news for the profit side, and Jabil is playing with the red ink bottle these days.

Sales are coming along nicely and even accelerating to some degree. Part of that comes from acquisitions, though. Hmm.

Margin

11/2005

2/2006

5/2006

8/2006

11/2006

2/2007

Gross

8.3%

8.2%

7.9%

7.5%

6.9%

6.4%

Operating

4.0%

4.1%

3.9%

3.6%

3.1%

2.6%

Net

2.8%

2.9%

3.0%

1.6%

1.2%

0.6%

Growth (Y-O-Y)

11/2005

2/2006

5/2006

8/2006

11/2006

2/2007

Revenue

23.1%

27.8%

31.4%

36.4%

36.9%

34.6%

Earnings

24.7%

33.0%

36.5%

(19.3%)

(42.6%)

(70.2%)
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Jabil has missed Wall Street's targets four quarters in a row, by as much as 46% in the latest period. I don't think it's a case of optimistic analysts -- after all, it sells to gadget makers such as Nokia (NYSE:NOK), 3Com (NASDAQ:COMS), and Quantum (NYSE:QTM), all of which have been caught up in various permutations of a soft market for high-end devices and pricing issues stemming from oversupply.

No, those are not conditions that inspire inflated expectations. Thusly, I'd have to place the responsibility for Jabil's underperformance at management's own feet. Judging by the revenue and earnings growth dichotomy, I'd say the company is chasing sales growth in places it shouldn't.

You may also have noticed an earnings release from Jabil only two weeks ago. What's up with that? That was actually a triple shot of results, covering the last three quarters up to Q2 of 2007. That was the conclusion of an internal review of stock-option granting practices that found no evidence of backdating. You be the judge, but the SEC is still looking into the matter.

Hometown heroes or not, Jabil doesn't look good to me. Something smells fishy, and I don't think it's the red tide at Clearwater Beach.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here, and he's wondering why the U.S. embassy makes it so hard to get back home. You can check out Anders' holdings if you like, and Foolish disclosure will help you find the road ahead.