Does Jabil Inc. (JBL) Look to be a Great Value Stock?

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Jabil Inc. JBL stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Jabil has a trailing twelve months PE ratio of 18.70, as you can see in the chart below:

This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.56. If we focus on the stock’s long-term PE trend, the current level puts Jabil’s current PE ratio above its midpoint over the past five years, with the number having risen rapidly over the past few months.

Further, the stock’s PE also compares favorably with the Zacks classified Electronics industry’s trailing twelve months PE ratio, which stands at 22.10. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that Jabil has a forward PE ratio (price relative to this year’s earnings) of just 15.86, so it is fair to say that a slightly more value-oriented path may be ahead for Jabil stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Jabil has a P/S ratio of about 0.29. This is a bit lower than the S&P 500 average, which comes in at 3.19 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, Jabil currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Jabil a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example,  its P/CF ratio (another great indicator of value) comes in at 5.61, which is far better than the industry average of 7.70. learly, JBL is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though Jabil might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘B’. This gives JBL a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have also been pretty favorable. The current quarter has seen one estimate to go higher in the past sixty days compared to none lower, while the full year estimate has also seen one estimate gong up and no down in the same time period.

This has had a significant impact on the consensus estimate as the current quarter consensus estimate has risen by 5.9% in the past two months and the full year estimate has inched up by 0.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Jabil, Inc. Price and Consensus

Jabil Circuit, Inc. Price and Consensus | Jabil Circuit, Inc. Quote

This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.

Bottom Line

Jabil is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 8%) and strong Zacks Rank, Jabillooks like a strong value contender. In fact, over the past one year, the Zacks Electronics industry has clearly outperformed the broader market, as you can see below:

So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Jabil Circuit, Inc. (JBL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research