It has been about a month since the last earnings report for Jabil (JBL). Shares have added about 6.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jabil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Jabil Q3 Earnings Surpass Estimates on Solid Demand, Guidance Raised
Jabil reported strong third-quarter fiscal 2025 results, with both bottom and top lines surpassing the Zacks Consensus Estimate. However, the company reported a top line expansion year over year, owing to healthy traction in the data center infrastructure, capital equipment, cloud and digital commerce end-markets.
JBL’s Net Income
Net income on a GAAP basis in the quarter was $222 million or $2.03 per share compared with $129 million or $1.06 in the prior-year quarter. The improvement is primality driven by top line growth.
Non-GAAP net income in the reported quarter was $279 million or $2.55 per share compared with $230 million or $1.89 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of $2.33.
JBL’s Revenues
Net sales during the quarter increased to $7.82 billion from $6.76 billion reported in the year-ago quarter. The top line beat the consensus estimate of $7.08 billion. Solid demand in Intelligent Infrastructure and Connected Living & Digital Commerce boosted the top line.
In the fiscal third quarter, the Regulated Industries segment generated $3.1 billion in revenues, flat year over year. The segment contributed 39% in revenues. The metric declined in this segment, owing to weakness in renewable energy and EV verticals.
Net sales from the Intelligent Infrastructure segment generated $3.4 billion in revenues. The segment contributed 44% of total revenues, up 51% year over year. The healthy demand in the Capital Equipment, AI-related Cloud and Data Center Infrastructure verticals supported the net sales.
About 17% of the total revenues came from the Connected Living & Digital Commerce segment. Net sales declined to $1.3 billion, down 7% year over year from this segment, owing to soft demand for consumer driven products. Strong growth in digital commerce and warehouse automation markets partially reversed this trend.
JBL’s Other Details
Gross profit was $681 million compared with $608 million in the year-ago quarter. Non-GAAP operating income aggregated $420 million, up from $350 million in the year-ago period. Non-GAAP operating margin was 5.4% down from the year-ago quarter’s figure of 6%.
JBL’s Cash Flow & Liquidity
In third-quarter fiscal 2025, Jabil generated $406 million of net cash from operating activities. As of May. 31, 2025, the company had $1.52 billion in cash and cash equivalents, with $2.38 billion of notes payable and long-term debt.
JBL’s Guidance Up
For the fourth quarter of fiscal 2025, revenues are expected to be in the range of $7.1-$7.8 billion. Non-GAAP operating income is projected in the $428-$488 million range. Management estimates non-GAAP earnings per share within the band of $2.64-$3.04.
Management expects cloud and data center infrastructure; capital equipment and digital commerce market will be the major growth drivers in 2025. For fiscal 2025, revenues are now projected at $29 billion, up from the prior estimation of $27.9 billion. Non-GAAP earnings per share are expected at $9.33, up from $8.95 previously estimated. The company is expected to generate more than $1.2 billion in adjusted free cash flow.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
VGM Scores
At this time, Jabil has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Jabil has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Jabil, Inc. (JBL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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