It has been about a month since the last earnings report for Jabil (JBL). Shares have added about 15.2% 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 Q1 Earnings Surpass Estimates, Revenues Decline Y/Y
Jabil reported healthy first-quarter fiscal 2025 results, with both the bottom and top lines surpassing the Zacks Consensus Estimate. However, the company reported a top-line contraction year over year, owing to weakness in some verticals. Healthy traction in the data center infrastructure, cloud and digital commerce end markets is a tailwind.
Net income on a GAAP basis in the quarter was $100 million or 88 cents per share compared with $194 million or $1.47 per share in the prior-year quarter. The decline is primarily attributed to top-line contraction year over year.
Non-GAAP net income in the reported quarter was $228 million or $2 per share compared with $343 million or $2.60 per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of $1.87.
Net sales during the quarter decreased to $6.99 billion from $8.4 billion reported in the year-ago quarter. However, the top line beat the consensus estimate of $6.6 billion. Demand softness in several end markets impeded the top line.
In the first quarter, the Regulated Industries segment contributed 42% in revenues. Revenue declined 7% year over year in this segment owing to weakness in the Auto & Transportation vertical.
Net sales from the Intelligent Infrastructure segment contributed 36% of total revenues, up 5% year over year. Healthy demand in the Capital Equipment, Cloud and Data Center Infrastructure vertical supported the net sales.
About 22% of the total revenues came from Connected Living & Digital Commerce segment. Net sales improved 46% year over year from this segment, owing to healthy momentum in Digital Commerce vertical.
Gross profit was $606 million compared with $775 million in the year-ago quarter. Non-GAAP operating income aggregated $347 million, down from $499 million in the year-ago period. Non-GAAP operating margin was 5% compared with 6% in the year-ago quarter.
In first-quarter fiscal 2025, Jabil generated $312 million of net cash from operating activities compared with $448 million in the previous year quarter. As of Nov. 30, 2024, the company had $2.05 billion in cash and cash equivalents, with $2.88 billion of notes payable and long-term debt.
For the second quarter of fiscal 2025, revenues are expected to be in the range of $6.1-$6.7 billion. Non-GAAP operating income is projected in the $286-$346 million range. Management estimates non-GAAP earnings per share within the band of $1.60-$2.00.
For fiscal 2025, revenues are projected at $27.3 billion. Adjusted free cash flow is estimated at $1.2 billion. Non-GAAP earnings per share are expected at $8.75.
In the past month, investors have witnessed a downward trend in estimates review.
At this time, Jabil has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Jabil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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