Jabil (NYSE:JBL) has shifted into a higher gear over the past six months, thanks to a turnaround in the company's financial fortunes despite the uncertainty posed by the novel coronavirus pandemic.

The manufacturing services company had pulled its full-year guidance earlier this year in the wake of the COVID-19 crisis. But it has been showing signs of a turnaround over the last couple of quarters. Jabil's latest fiscal fourth-quarter results, reported last week, were solid as the company recorded double-digit growth thanks to its largest customer -- Apple (NASDAQ:AAPL).

But should investors buy Jabil stock in the hope of more upside after the company's latest quarterly performance? Let's find out.

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Jabil is making a change

Jabil's revenue for the fourth quarter of fiscal 2020 that ended on Aug. 31 increased 11% year over year to $7.3 billion, which was way higher than analysts' expectations of $6.3 billion. This is a nice jump over Jabil's fiscal third-quarter year-over-year revenue growth of just 3%, indicating that the company's business environment is getting favorable.

However, Jabil was unable to top its strong quarterly results with impressive guidance. The company anticipates $7 billion in revenue at the mid-point of its guidance range this quarter, which would be nearly 7% lower than the $7.5 billion revenue generated in the prior-year period.

The lower revenue this quarter can be attributed to a substantial decline in Jabil's revenue from its Electronic Manufacturing Services (EMS) segment, which accounts for nearly 62% of the top line. Jabil anticipates a 15% decline in EMS revenue this quarter.

The EMS unit manufactures solutions that are used across a variety of markets such as cloud, industrial, automotive, energy, defense, telecom, smart home, and retail. This segment's revenue is expected to dip this year because of a change in the business model.

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Jabil expects $4.5 billion in revenue in fiscal 2021 from the 5G, wireless, and cloud business that falls under the broader EMS division, down from $5.5 billion last fiscal year. The company attributes this drop to a change in the business model of the cloud business. It will now follow a consignment model in the cloud business as compared to the current model of purchase and resale.

Jabil believes that this is a more efficient way to conduct business in the cloud space that will lead to higher margins and use less cash. Typically, a consignment model means that Jabil will now get a commission from its suppliers when it sells the solutions to the customer. Now that Jabil won't be booking the full revenue from its cloud sales, its top line is bound to take a hit.

But the company is confident that the move will result in higher earnings power, leading to a margin expansion of 80 basis points this fiscal year thanks to the shift. More specifically, Jabil sees the EMS business delivering core operating margin of 3.5% this fiscal year as compared to 2.7% in fiscal 2020. So, the near-term dip in Jabil's cloud business doesn't look like a huge concern right now.

A closer look at the growth engine

Jabil had recorded year-over-year 17% revenue growth in its Diversified Manufacturing Services (DMS) unit last quarter. DMS revenue increased substantially last quarter thanks to strong demand from the mobility and the healthcare verticals.

Mobility, which accounted for a fourth of the DMS revenue last fiscal year, put in a strong showing thanks to Apple's preparation for the launch of a new generation of iPhone devices, as well as other products such as the iPad. Jabil is known for manufacturing the casings used in these Apple devices, and the company reportedly gets 22% of its revenue from the iPhone maker.

So it wasn't surprising to see the DMS unit put in a strong showing last quarter. The good part is that Jabil's mobile business isn't going to run out of steam thanks to Apple, as the company's 5G-enabled iPhones are expected to kick-start a huge upgrade cycle.

On the other hand, the other components of the DMS unit such as healthcare and automotive are expected to put in a stronger performance this year, as management pointed out on the earnings conference call. Jabil anticipates a margin expansion of 80 basis points in this segment this year.

In all, it won't be surprising to see Jabil shares do well going forward, as the company has quite a few things going for it that could lead to an improved earnings performance. This is why investors looking to buy a tech stock trading at attractive valuation should keep a close eye on Jabil as it trades at less than 10 times forward earnings.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.