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Jabil (JBL) Q4 Earnings Beat Estimates, Revenues Rise Y/Y

Jabil JBL reported fourth-quarter fiscal 2020 earnings of 98 cents per share, which beat the Zacks Consensus Estimate by 48.5% and increased 11.4% year over year.

Revenues increased 11.1% year over year to $7.3 billion and beat the Zacks Consensus Estimate by 16.7%.

Jabil, Inc. Price, Consensus and EPS Surprise

Jabil, Inc. price-consensus-eps-surprise-chart | Jabil, Inc. Quote

Quarter Details

Electronics Manufacturing Services (EMS) revenues accounted for 61% of total revenues and increased 8% year over year to $4.45 billion. Moreover, Diversified Manufacturing Services (DMS) revenues accounted for 39% of total revenues and improved 17% year over year to $2.85 billion.

Gross margin, on a GAAP basis, contracted 80 basis points (bps) year over year to 6.7%.

Core EBITDA margin contracted 60 bps on a year-over-year basis to 6%.

Operating expenses on a GAAP basis contracted 60 bps on a year-over-year basis to 4%. As a percentage of revenues, while selling, general and administrative (SG&A) expenses contracted 70 bps year over year to 3.5%, research & development (R&D) expenses remained unchanged on a year-over-year basis.

Non-GAAP core operating margin contracted 20 bps on a year-over-year basis to 3.5%.

Balance Sheet & Cash Flow

As of Aug 31, 2020, cash and cash equivalents were $1.39 billion compared with $763.3 million as of May 31, 2020.

In fourth-quarter fiscal 2020, Jabil repurchased approximately 763,000 million shares for $25 million, bringing total year-to-date repurchases to $215 million, as part of a two-year $600 million authorization announced in September 2019.

Guidance

For first-quarter fiscal 2021, Jabil expects total revenues between $6.7 billion and $7.3 billion.

DMS revenues are forecast to be $3.8 billion, up 1% year over year. EMS revenues are forecast to be $3.2 billion, down nearly 15% year over year.

Core non-GAAP operating income is estimated to be $295-$335 million. The company’s core earnings are expected between $1.15 and $1.35 per share on a non-GAAP basis.

For fiscal 2021, revenues are expected to be around $26.5 billion with expected core margin of 4%.

DMS segment revenues are expected to be $14 billion with expected core margin of 4.5% for fiscal 2021.

Further, EMS segment revenues are expected to be $12.5 billion with core margin projected to be 3.5%.

The company’s core earnings are expected to be $4 per share on a non-GAAP basis.

Adjusted free cash flow is expected to be more than $600 million.

Zacks Rank & Stocks to Consider

Jabil currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Sanmina Corporation SANM, which sports a Zacks Rank #1 (Strong Buy), and Celestica, Inc. CLS and EPAM Systems, Inc. EPAM, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Sanmina Corporation, Celestica and EPAM Systems is currently pegged at 12%, 25.6% and 15.6%, respectively.

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