Jabil JBL reported first-quarter fiscal 2021 earnings of $1.60 per share, which beat the Zacks Consensus Estimate by 53.8% and increased 52.4% year over year.
Revenues increased 4.4% year over year to $7.83 billion backed by contract wins in healthcare, automotive, cloud and 5G. The figure beat the Zacks Consensus Estimate by 11.9%.
Quarter Details
Electronics Manufacturing Services (EMS) revenues contributed 46% to total revenues and declined 4% year over year to $3.6 billion.
Diversified Manufacturing Services (DMS) revenues contributed 54% to total revenues and improved 13% year over year to $4.23 billion. The upside can be attributed to growth in its $5-billion healthcare and packaging business, which serves many of the most critical healthcare, medical device and consumer packaged goods companies in the world.
Jabil, Inc. Price, Consensus and EPS Surprise
Jabil, Inc. price-consensus-eps-surprise-chart | Jabil, Inc. Quote
Gross margin, on a GAAP basis, expanded 70 basis points (bps) year over year to 8.1%.
Core EBITDA margin expanded 100 bps on a year-over-year basis to 7.1%.
Operating expenses, on a GAAP basis, contracted 130 bps on a year-over-year basis to 4.1%. As a percentage of revenues, while selling, general and administrative (SG&A) expenses contracted 50 bps year over year to 3.9%, research & development (R&D) expenses remained unchanged on a year-over-year basis.
Non-GAAP core operating margin expanded 100 bps on a year-over-year basis to 4.7%.
Balance Sheet & Cash Flow
As of Nov 30, 2020, cash and cash equivalents were $1.1 billion compared with $1.39 billion as of Aug 31, 2020. The company ended first-quarter fiscal 2021 with committed capacity under the global credit facilities of $3.8 billion.
In first-quarter fiscal 2021, Jabil repurchased approximately 1.5 million shares for $50 million, bringing total year-to-date repurchases to $216.5 million, as part of a two-year $600-million authorization announced in September 2019.
Guidance
For second-quarter fiscal 2021, Jabil expects total revenues between $6.2 billion and $6.8 billion.
DMS revenues are forecast to be $3.5 billion, which suggests an increase of 22% year over year. EMS revenues are forecast to be $3 billion, which indicates a decline of nearly 8% year over year.
Core non-GAAP operating income is estimated to be $210-$260 million. The company’s core earnings are expected between 83 cents and $1.03 per share on a non-GAAP basis.
For fiscal 2021, revenues are expected to be around $27.5 billion with expected core margin of 4.1%.
DMS segment revenues are expected to be $15 billion with expected core margin of 4.5% for fiscal 2021.
Further, EMS segment revenues are expected to be $12.5 billion with core margin projected to be 3.6%.
The company’s core earnings are expected to be $4.6 per share on a non-GAAP basis.
Zacks Rank & Stocks to Consider
Jabil currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Sanmina Corporation SANM, Dell Technologies (NYSE:DELL) Inc. DELL and Vertiv Holdings (NYSE:VRT) VRT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Long-term earnings growth rate for Sanmina Corporation, Dell and Vertiv Holdings is currently pegged at 12%, 12% and 38.9%, respectively.
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