Jabil Circuit (JBL) Q1 Earnings: Will The Stock Surprise?

Jabil Circuit Inc JBL is slated to release first-quarter fiscal 2017 results on Dec 15 after the closing bell. Last quarter, the company delivered stronger-than-expected results with a positive earnings surprise of 75%. Jabil Circuit has delivered an average positive earnings surprise of 41.58% in the trailing four quarters.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Jabil continues to gain from the fast growing sectors like industrial, renewable energy, clean tech and medical. Moreover, the increase in technology spending bodes well for Jabil’s top line. Though the company’s realignment program will have an adverse effect on its financial position over the next two years, it will eventually boost its growth and market share.

On the other hand, Jabil’s Diversified Manufacturing Services (DMS) segment continues to suffer owing to weakness in demand for Apple Inc’s AAPL iPhone. Apple continues to be Jabil’s number one customer accounting for 24% of its total revenue. Customer concentration with its top five customers accounting for a major chunk of its revenues continues to be a major threat for Jabil. Escalating market competition and macroeconomic headwinds add to its woes.

Jabil expects total revenue to decrease 6% year over year to the range $4.8 billion to $5 billion, while core operating income is estimated in the range of $175 million to $225 million.

On a year-over-year basis, revenues from Diversified Manufacturing are expected to decrease 12%, while Electronics Manufacturing Services revenues are expected to be flat at $2.7 billion.

The company expects the bottom line (on a GAAP basis) to be in a range of a loss of 5 cents to earnings of 36 cents per share.

JABIL CIRCUIT Price and EPS Surprise



Earnings Whisper

Our proven model does not conclusively show that Jabil is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Jabil currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 58 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Jabil’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are a couple of companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming release:

Western Digital Corporation WDC has an Earnings ESP of +16.77 % and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Juniper Networks JNPR has an Earnings ESP of +3.85% and a Zacks Rank #2.

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