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Jabil (JBL) Boosts Sustainable Packaging With Ecologic Buyout

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Zacks Equity Research
·3 min read
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Jabil JBL recently announced the acquisition of Ecologic Brands, a California-based sustainable paper-based packaging solutions provider.

According to the deal, Ecologic’s team and operations will be integrated with Jabil’s Packaging Solutions division. Further, Jabil’s sustainable packaging product platform will operate under Ecologic’s name.

Rationale Behind the Acquisition

Ecologic’s acquisition gives Jabil access to the former’s commercially viable paper bottle technology, which was the world’s first breakthrough technology helping companies to shift from the environmentally harmful plastic packaging. The solution is powered by deep material expertise and innovative manufacturing processes.
 
The integration enables Jabil to provide paper-based packaging solutions to its consumer-packaged goods (CPG) customers. Consequently, this will help the company reduce plastic packaging, which bodes well for its sustainability goals and expands its sustainable packaging capabilities.
 

Jabil, Inc. Price and Consensus

Jabil, Inc. Price and Consensus
Jabil, Inc. Price and Consensus

Jabil, Inc. price-consensus-chart | Jabil, Inc. Quote

 

Moreover, Ecologic’s customers include major CPG companies, such as L’Oréal and Seventh Generation, which utilize its eco.bottle solution. The buyout further boosts Jabil’s existing customer base of CPG companies.

A Well-Diversified Commercial Portfolio Bodes Well

Jabil’s shares have gained 5.5% over the past year compared with the Zacks Electronics - Manufacturing Services industry’s growth of 0.8%.

The manufacturing solution provider’s consistent efforts to build a well-balanced portfolio of businesses with the end market and product diversification have been a major growth driver.

The company’s Electronics Manufacturing Services (EMS) segment includes digital print, retail, semi-cap, 5G wireless, cloud networking and storage businesses. Growth in this segment is largely aided by solid demand for the company’s 5G wireless and cloud computing services.

Additionally, strength in the Diversified Manufacturing Services (DMS) segment, which consists of its healthcare and packaging, mobility, connected devices, automotive, and transportation businesses is a key positive.

Notably, Jabil’s $5-billion healthcare and packaging solutions have witnessed strong adoption from healthcare, medical device and consumer packaged goods companies globally. Further, the company benefits from the growing traction in its mobility and connected devices business induced by pandemic-led remote working and learning environment.

Moreover, the expansion of Jabil’s sustainable packaging offerings with the recent acquisition of Ecologic bodes well for its DMS segment and is expected to drive top-line growth over the long haul.

Zacks Rank & Other Stocks to Consider

Jabil currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader technology sector are NVIDIA NVDA, Micron MU and Mercury MRCY. All three stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for NVIDIA, Micron and Mercury is currently pegged at 18.3%, 12.7%, and 8.1%, respectively.

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