Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Jabil Jumped Today

By Timothy Green - Jun 19, 2019 at 1:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company's top line exceeded expectations.

What happened

Shares of manufacturing services provider Jabil (JBL 0.86%) surged on Wednesday after the company reported fiscal third-quarter results that beat expectations. Earnings matched analyst estimates, but revenue was higher than expected. The stock was up about 8.4% at noon EDT, after jumping much as 11.4% earlier in the day.

So what

Jabil reported third-quarter revenue of $6.14 billion, up 12.9% year over year and $130 million higher than analysts were expecting. The diversified manufacturing services segment suffered a 6% revenue decline, but this was more than offset by 26% growth in electronics manufacturing services.

A rising chart.

Image source: Getty Images.

Non-GAAP earnings per share came in at $0.57, up from $0.46 in the prior-year period and in line with analyst expectations. GAAP EPS was $0.28, up from $0.25.

CEO Mark Mondello sees a strong fourth quarter ahead: "In the fourth quarter, our outlook for revenue, core EPS and cash flow is solid as we see robust demand in 5G / wireless, cloud, industrial, healthcare and packaging. Over the longer-term, we remain relentless in our commitment to drive margin expansion and strong cash flows through a well-balanced, diverse stream of income."

Now what

Jabil expects to produce fourth-quarter revenue between $6.3 billion and $6.9 billion, an increase of 14% year over year at the midpoint. The diversified manufacturing services segment is forecast to grow by 4%, and the electronics manufacturing service segment is expected to grow by 22%. The company guided for non-GAAP EPS between $0.76 and $0.96.

Jabil counted on Apple for 28% of its revenue in fiscal 2018, so disappointing results from Apple later this year could derail Jabil's own results. The company's guidance ranges are wide, which may reflect a higher-than-usual level of uncertainty.

Jabil's performance and guidance were solid, which was enough to push up the stock. But longer-term risks remain.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Jabil Circuit, Inc. Stock Quote
Jabil Circuit, Inc.
JBL
$55.15 (0.86%) $0.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.