Will Top Line Decline Affect Jabil's (JBL) Q1 Earnings?
Jabil Inc. JBL is set to release first-quarter fiscal 2024 results on Dec 14, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 6.06%. It pulled off a trailing four-quarter earnings surprise of 4.65%, on average.
The leading global supplier of electronic manufacturing services is likely to witness a revenue contraction year over year in the first quarter of fiscal 2024. Sluggish demand trends in some end markets and macroeconomic headwinds are likely to impede the top-line growth.
Factors at Play
During the quarter, Jabil announced the takeover of manufacturing and sales operations of Intel’s Silicon Photonics-based pluggable optical transceiver product lines. It is also putting a strong emphasis on investments in data center infrastructure services, liquid cooling and silicon photonics. The strategic move will likely enhance JBL’s comprehensive suite of photonics capabilities, enabling it to effectively match the dynamic demands of the evolving data center ecosystem.
Jabil announced the successful completion of the acquisition of Retronix, a leader in high-reliability component preparation services such as laser reballing, alloy conversion, retinning and more. Retronix boasts 30 years of expertise across different industries such as aerospace, defense and automotive. The buyout will significantly boost security, quality and reduce electronic waste across Jabil’s vast product portfolio, augmenting its circular economy initiatives. This is likely to be reflected in the upcoming results.
In the fiscal first quarter, Jabil’s product division Badger Technologies has upgraded the capability of its multipurpose autonomous robots in Stop & Shop stores across 300 locations. The upgraded version of the robot efficiently assesses real-time information to improve on-shelf product availability and price accuracy. This is likely to have supported the net sales during the quarter.
However, Jabil expects demand softness induced by short-term inventory corrections across certain end markets. This is likely to have affected the top line. Frequent acquisitions further expose the company to integration risks. Effectively integrating systems, processes and technologies of the entities can be a challenging endeavor. Incompatibility can lead to operational disruptions and reduce the expected gains from synergy realization.
Our revenue estimate for the DMS vertical is pegged at $5,100 million, indicating a marginal decline from $5,106.6 million reported in the year-ago quarter. Per our estimate, revenues from the EMS vertical are pegged at $3,619.3 million, down 20.1% year over year.
For the November quarter, the Zacks Consensus Estimate for revenues is pegged at $8,351 million, which indicates a decline from the year-ago quarter’s tally of $9,635 million. The consensus estimate for earnings is pegged at $2.54, suggesting an increase from $2.31 reported in the prior-year quarter.
Earnings Whispers
Our proven model doesn’t conclusively predict an earnings beat for Jabil this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.65%. The Most Accurate Estimate is pegged at $2.53, while the Zacks Consensus Estimate stands at $2.54. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Jabil, Inc. Price and EPS Surprise
Jabil, Inc. price-eps-surprise | Jabil, Inc. Quote
Zacks Rank: Jabil currently has a Zacks Rank #3.
Stocks to Consider
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 season:
Adobe ADBE is set to release its quarterly numbers on Dec 13. It has an Earnings ESP of +0.24% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Micron Technology MU stands at +1.78%. The company carries a Zacks Rank of 3. It is scheduled to report quarterly numbers on Dec 20.
The Earnings ESP for BlackRock BLK stands at +2.78% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jan 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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
BlackRock, Inc. (BLK) : Free Stock Analysis Report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
Adobe Inc. (ADBE) : Free Stock Analysis Report
Jabil, Inc. (JBL) : Free Stock Analysis Report
