Jabil (JBL) Gears Up To Report Q3 Earnings: What To Expect?

Jabil Inc. (NYSE:JBL) is set to report fiscal third-quarter 2018 results on Jun 14. The company beat the Zack Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 5.21%.

In the last reported quarter, the company reported earnings of 66 cents per share, which beat the Zacks Consensus Estimate by 4 cents and were much higher than the prior-year quarter’s figure of 49 cents.

Revenues increased 19.2% year over year to $5.301 billion and outpaced the Zacks Consensus Estimate of $4.911 billion as well.

Notably, Jabil shares have gained 12.5% year to date, outperforming the industry’s rally of 5.3%.

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

Factors at Play

Jabil is benefiting from growth in both Electronic Manufacturing Services (EMS) and Diversified Manufacturing Services (DMS) segment.

The EMS segment is driven by incremental wins in capital equipment, industrial, energy and automotive. The company expects the restructuring program in the segment to drive margins.

Opportunities in healthcare and packaging businesses will continue to remain growth catalysts for the company’s DMS segment. Moreover, diversification within the Green Point business is a tailwind.

For the third quarter, Jabil expects total revenues to increase 9% (at mid-point) year over year to the range of $4.75–$5.05 billion. DMS revenues are forecast to grow 10% year over year to $1.85 billion. EMS revenues are anticipated to increase 8% on a year-over-year basis to $3.05 billion.

However, increase in investments in the EMS segment coupled with cost overshoot in the packaging business remains an overhang on margins. With Apple (NASDAQ:AAPL) being the biggest customer of the company, sluggish sales of iPhones also pose a huge risk to the company.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Jabil has an Earnings ESP of 0.00% and a Zacks Rank #3, which makes surprise prediction difficult.

Stocks With a Favorable Combination

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

Entegris, Inc. (NASDAQ:ENTG) has an Earnings ESP of +3.30 and a Zacks Rank #2. You can seethe complete list of today’s Zacks #1 Rank stocks here.

FactSet Research Systems Inc. (NYSE:FDS) has an Earnings ESP of +0.70% and a Zacks Rank #2.

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