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Is JBL Stock a Prudent Investment Bet Post Solid Q2 Earnings?
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Jabil, Inc. (JBL - Free Report) reported strong second-quarter fiscal 2025 results, with both bottom and top lines surpassing the respective Zacks Consensus Estimate. Healthy traction in the data center infrastructure, cloud and digital commerce end-markets is a tailwind. However, the company reported a top-line decline year over year, owing to weakness in some verticals.
Shares of the company have surged 18.4% over the past six months, driven by healthy revenues on the back of a flexible business model and a quick time-to-market schedule to meet clients’ evolving needs. With healthy revenue-generating potential, this Zacks Rank #2 (Buy) electronics solutions provider appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Growth Drivers of JBL
Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target that “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable. The diversification increases the reliability of the company’s earnings and revenues, thereby driving returns for investors in the long haul.
In addition, Jabil’s top-line growth is expected to benefit from strength in healthcare, cloud, retail and industrial. The company is likely to gain from the rapid adoption of 5G wireless and cloud computing in the long haul. It is benefiting from solid demand in key end markets, excellent operational execution and skillful management of supply chain dynamics.
With a presence across 100 locations in 30 countries, Jabil is likely to gain from secular growth drivers with strong margin and cash flow dynamics. Moreover, its unmatched end-market experience, technical and design capabilities, manufacturing know-how, supply chain insights and global product management expertise have put it in good stead. An extensive global footprint is further strengthened by a centralized procurement process, which, coupled with a single Enterprise Resource Planning system, aids customers with end-to-end supply chain visibility.
JBL Raises Guidance
Jabil has reorganized its internal structure to align its operations more closely with specific end markets. With this transition, the company aims to develop domain-specific expertise in core areas and become more agile in response to market demands. This restructuring initiative is expected to position the company for long-term growth.
Management expects cloud and data center infrastructure, capital equipment and digital commerce market will be the major growth drivers for 2025. For fiscal 2025, revenues are now projected at $27.9 billion, up from the prior estimation of $27.3 billion. Non-GAAP earnings are expected at $8.95 per share, up from earlier expectations of $8.75. The company is likely to generate more than $1.2 billion in adjusted free cash flow.
The stock delivered an earnings surprise of 4.9%, on average, in the trailing four quarters and has a long-term earnings growth expectation of 12.5%.
Other Key Picks
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista delivered an earnings surprise of 12.9%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Ubiquiti Inc. (UI - Free Report) , sporting a Zacks Rank #1, offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. Its service-provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing, while enterprise product platforms provide wireless local area network infrastructure, video surveillance products and machine-to-machine communication components. In the trailing four quarters, it delivered an earnings surprise of 7.5%.
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 15%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.
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Is JBL Stock a Prudent Investment Bet Post Solid Q2 Earnings?
Jabil, Inc. (JBL - Free Report) reported strong second-quarter fiscal 2025 results, with both bottom and top lines surpassing the respective Zacks Consensus Estimate. Healthy traction in the data center infrastructure, cloud and digital commerce end-markets is a tailwind. However, the company reported a top-line decline year over year, owing to weakness in some verticals.
Shares of the company have surged 18.4% over the past six months, driven by healthy revenues on the back of a flexible business model and a quick time-to-market schedule to meet clients’ evolving needs. With healthy revenue-generating potential, this Zacks Rank #2 (Buy) electronics solutions provider appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Growth Drivers of JBL
Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target that “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable. The diversification increases the reliability of the company’s earnings and revenues, thereby driving returns for investors in the long haul.
In addition, Jabil’s top-line growth is expected to benefit from strength in healthcare, cloud, retail and industrial. The company is likely to gain from the rapid adoption of 5G wireless and cloud computing in the long haul. It is benefiting from solid demand in key end markets, excellent operational execution and skillful management of supply chain dynamics.
With a presence across 100 locations in 30 countries, Jabil is likely to gain from secular growth drivers with strong margin and cash flow dynamics. Moreover, its unmatched end-market experience, technical and design capabilities, manufacturing know-how, supply chain insights and global product management expertise have put it in good stead. An extensive global footprint is further strengthened by a centralized procurement process, which, coupled with a single Enterprise Resource Planning system, aids customers with end-to-end supply chain visibility.
JBL Raises Guidance
Jabil has reorganized its internal structure to align its operations more closely with specific end markets. With this transition, the company aims to develop domain-specific expertise in core areas and become more agile in response to market demands. This restructuring initiative is expected to position the company for long-term growth.
Management expects cloud and data center infrastructure, capital equipment and digital commerce market will be the major growth drivers for 2025. For fiscal 2025, revenues are now projected at $27.9 billion, up from the prior estimation of $27.3 billion. Non-GAAP earnings are expected at $8.95 per share, up from earlier expectations of $8.75. The company is likely to generate more than $1.2 billion in adjusted free cash flow.
The stock delivered an earnings surprise of 4.9%, on average, in the trailing four quarters and has a long-term earnings growth expectation of 12.5%.
Other Key Picks
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista delivered an earnings surprise of 12.9%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Ubiquiti Inc. (UI - Free Report) , sporting a Zacks Rank #1, offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. Its service-provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing, while enterprise product platforms provide wireless local area network infrastructure, video surveillance products and machine-to-machine communication components. In the trailing four quarters, it delivered an earnings surprise of 7.5%.
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 15%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.