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Is Jabil Circuit (JBL) Poised to Beat Earnings Estimates? - Analyst Blog

Jabil Circuit Inc. ( JBL ) is set to report fourth quarter fiscal 2014 results on Sep 24. Last quarter it posted a 20% positive surprise. The company has posted an average positive earnings surprise of 26.5% over the past four quarters.

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

Growth Factors This Past Quarter

Jabil's increasing association with Apple ( AAPL ) is expected to boost its growth prospects. Additionally, estimated strong growth from the Nypro acquisition, restructuring benefits and customer wins will help Jabil to compete with the likes of Flextronics in 2014 and 2015.

Further, the authorization of a new share repurchase plan worth $100 million will beef up shareholder confidence and boost earnings per share going forward.

Nonetheless, we believe that Jabil will continue to face macroeconomic headwinds, which is a major roadblock for achieving the 2015 target. We believe that the disengagement from BlackBerry ( BBRY ) will negatively impact the top line and margins over the next couple of quarters. However, Jabil's positive 2015 guidance will drive the stock price in the near term.

Moreover, the company continues to invest in the Diversified Manufacturing segment, which will increase its capital expenditure. Asset reallocation in the segment is also expected to increase near-term uncertainty.

Earnings Whispers?

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

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at loss of 7 cents. Hence, the difference is of 0.00%.

Zacks Rank #3 (Hold): Jabil's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

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

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

  • Micron Technology, Inc. ( MU ), Earnings ESP of +3.70% and a Zacks Rank #3
  • Neogen Corp. ( NEOG ), Earnings ESP of +4.35% and a Zacks Rank #3

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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