Jabil (JBL) Up 15.2% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Jabil's recent earnings report shows a mixed performance with net income declining year over year, but revenues surpassing estimates, indicating potential resilience despite market challenges [2][3][4]. Financial Performance - Jabil reported a net income of $100 million or $0.88 per share for Q1 fiscal 2025, down from $194 million or $1.47 per share in the prior year, primarily due to top-line contraction [3]. - Non-GAAP net income was $228 million or $2 per share, compared to $343 million or $2.60 per share in the previous year, exceeding the Zacks Consensus Estimate of $1.87 [3]. - Revenues decreased to $6.99 billion from $8.4 billion year over year, but exceeded the consensus estimate of $6.6 billion [4]. Segment Performance - The Regulated Industries segment contributed 42% of revenues, with a 7% decline year over year due to weakness in the Auto & Transportation vertical [4]. - The Intelligent Infrastructure segment accounted for 36% of total revenues, showing a 5% year-over-year increase supported by demand in Capital Equipment, Cloud, and Data Center Infrastructure [5]. - The Connected Living & Digital Commerce segment contributed 22% of total revenues, with a significant 46% year-over-year increase driven by strong performance in Digital Commerce [5]. Profitability Metrics - Gross profit was reported at $606 million, down from $775 million in the prior year [6]. - Non-GAAP operating income was $347 million, a decrease from $499 million year over year, with a non-GAAP operating margin of 5% compared to 6% in the previous year [6]. Cash Flow and Liquidity - Jabil generated $312 million in net cash from operating activities, down from $448 million in the previous year [7]. - As of November 30, 2024, the company had $2.05 billion in cash and cash equivalents, alongside $2.88 billion in notes payable and long-term debt [7]. Future Outlook - For Q2 fiscal 2025, Jabil expects revenues between $6.1 billion and $6.7 billion, with non-GAAP operating income projected between $286 million and $346 million [8]. - For the full fiscal 2025, revenues are projected at $27.3 billion, with adjusted free cash flow estimated at $1.2 billion and non-GAAP earnings per share expected at $8.75 [9]. Estimate Trends - There has been a downward trend in estimates for Jabil over the past month, indicating a potential shift in market expectations [10][12]. - Jabil currently holds a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [12]. Investment Scores - Jabil has a Growth Score of B, a Momentum Score of D, and a Value Score of A, placing it in the top 20% for the value investment strategy [11].