Jabil (JBL): Buy, Sell, or Hold Post Q2 Earnings?

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JBL Cover Image

Jabil trades at $307.75 per share and has stayed right on track with the overall market, gaining 10.9% over the last six months. At the same time, the S&P 500 has returned 10.5%.

Is JBL a buy right now? Find out in our full research report, it’s free.

Why Does JBL Stock Spark Debate?

With manufacturing facilities spanning the globe from China to Mexico to the United States, Jabil (NYSE: JBL) provides electronics design, manufacturing, and supply chain solutions to companies across various industries, from healthcare to automotive to cloud computing.

Two Things to Like:

1. Economies of Scale Give It Negotiating Leverage with Suppliers

With $33.59 billion in revenue over the past 12 months, Jabil is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s challenging to maintain high growth rates when you’ve already captured a large portion of the addressable market. To accelerate sales, Jabil likely needs to optimize its pricing or lean into new offerings and international expansion.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.

Jabil’s EPS grew at 18.4% compounded annual growth rate over the last five years, higher than its 2.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Jabil Trailing 12-Month EPS (Non-GAAP)

One Reason to Be Careful:

Long-Term Revenue Growth Disappoints

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Jabil’s 2.9% annualized revenue growth over the last five years was sluggish. This wasn’t a great result, but there are still things to like about Jabil.

Jabil Quarterly Revenue

Final Judgment

Jabil’s merits more than compensate for its flaws. At $307.75 per share (or 19.8× forward P/E), is now the right time to buy the stock? See for yourself in our in-depth research report, it’s free.

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