Don't Overlook Jabil (JBL) Stock After Topping Its Q3 Expectations

Core Viewpoint - Jabil Inc. has demonstrated strong fiscal third-quarter results, making it a notable investment opportunity amidst a quiet earnings season and geopolitical tensions in the Middle East [1] Group 1: Customer Base - Jabil serves a diverse range of major global companies, with Apple and Amazon being two of its largest clients [2] - The company has diversified its customer base, including significant clients like Johnson & Johnson and Ericsson [3] Group 2: Financial Performance - In Q3, Jabil's sales increased by 15% year over year to $7.82 billion, exceeding estimates by 10% [4] - Q3 EPS rose by 35% to $2.55, surpassing earnings expectations by 9% [4] - Jabil has consistently outperformed earnings expectations for 21 consecutive quarters, with an average earnings surprise of 6.68% over the last four quarters [5] Group 3: Guidance and Outlook - For Q4, Jabil anticipates sales between $7.1 billion and $7.8 billion, with a consensus estimate of $7.55 billion indicating 8% growth [6] - Expected Q4 EPS is projected between $2.64 and $3.04, with current projections at $2.75, reflecting a 19% growth [6] - Jabil expects continued revenue growth, margin enhancement, and strong free cash flow generation, aligning with trends such as AI [8] Group 4: Stock Performance and Valuation - Year-to-date, Jabil's stock has risen over 40%, significantly outperforming broader market indexes [9] - Over the last three years, Jabil's stock has gained more than 200%, outpacing major tech customers and benchmark indices [9] - Despite strong performance, Jabil trades at a slight discount to the benchmark with a forward P/E of 22.9X, lower than many high-performing tech stocks [10] Group 5: Conclusion and Future Prospects - Jabil holds a Zacks Rank 2 (Buy) as earnings estimates trend higher following strong Q3 results [11] - The company is projected to generate over $1.2 billion in free cash flow this year and maintains a healthy balance sheet with a debt to core EBITDA ratio of approximately 1.4X [11] - Jabil is set to complete a $1 billion share repurchase plan, indicating management's confidence in sustained operational performance [12]