Shares of Jabil Circuit JBL scaled a new 52-week high of $31.70 on Jun 9. This comes a few days before its third-quarter fiscal 2017 earnings release which is scheduled to be announcedthis Wednesday. The stock eventually closed at $31.04, reflecting a year-to-date return of 31.1%. Notably, shares of Jabil Circuit have outperformed the Zacks Electronics - Manufacturing Services industry's gain of 18.1%.
An excellent track record of exceeding the quarterly earnings expectations along with the encouraging third-quarter revenue outlook, consistent cash flows and continued focus on product enhancement improved Jabil's share price growth.
With respect to the earnings surprise history, the company has surpassed the Zacks Consensus Estimate in the trailing four quarters with an average surprise of 51.27%.
Apart from reporting better-than-expected second-quarter fiscal 2017 results, the company's revenue outlook for the third quarter has further buoyed analyst confidence. For the third quarter, Jabil anticipates total company net revenue to increase 2% (at mid point) year over year and to be in the range of $4.25-$4.55 billion.
The stock has witnessed upward estimate revisions since its last quarterly results. The Zacks Consensus Estimate for the to-be-reported quarter is now pegged at 22 cents representing an increase of 15.8% from 19 cents expected 90 days ago. Similarly for fiscal 2017, the estimate has risen 8.3% (14 cents) to $1.83.
Jabil Circuit, Inc. is one of the largest global suppliers of electronic manufacturing services offering comprehensive electronics design, production, and product management services to global companies. The company's Electronic Manufacturing Services (EMS) segment (60% of fiscal 2016 revenues) is well poised for strong growth over the next few years, primarily driven by emerging EMS sectors such as industrial, renewable energy, clean tech and medical. Jabil's DMS segment is backed by the strength in mobility and lifestyle businesses.
Jabil Circuit, Inc. Price and Consensus
Jabil Circuit, Inc. Price and Consensus | Jabil Circuit, Inc. Quote
Going ahead we are positive about its ongoing realignment program which is aimed at significantly lowering expenses while maintaining the production capacities. Although a negative financial impact is expected over the next two years, the company is looking forward to benefit considerably from this cost-savings initiative in the long-term. Consequently, this is likely to boost the bottom-line results.
Additionally, the company has ample liquidity to pursue shareholder returns, through share repurchase and dividend payout. As of Feb 28, 2017, cash and cash equivalents were $755.1 million. The company also stated that it was looking to enhance shareholder returns as a percentage of cash flow from operations to 40% from 20% currently but not exceeding $1 billion by fiscal 2018. Last year, it had announced a new $400 million worth repurchase plan. This robust shareholder returns plan will continue to retain investor interest in the stock.
Currently, Jabil carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the broader tech space include TiVo Corp TIVO , MercadoLibre MELI and Ollie's Bargain Outlet Holdings OLLI . While TiVo and MercadoLibre both sport a Zacks Rank #1 (Strong Buy), Ollie's Bargain Outlet carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
In the trailing four quarters, TiVo, MercadoLibre and Ollie's Bargain delivered average positive earnings surprises of 67.56%, 26.74% and 14.56%, respectively.
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