Jabil (JBL) Stock Falls Amid Market Uptick: What Investors Need to Know

On CNBC's “Mad Money Lightning Round,” Jim Cramer recommended buying Jabil Inc. , adding that it is “such a good company.”

On Sept. 26, Jabil reported better-than-expected fourth-quarter financial results and approved a $1 billion share buyback. Jabil reported fourth-quarter revenue of $6.96 billion, down by 17.7% year-on-year, beating the analyst consensus estimate of $6.59 billion. The print manufacturing company’s adjusted EPS of $2.30 beat the analyst consensus estimate of $2.22.

When asked about MeiraGTx Holdings plc , he said, “Put it away, speculate. If something great happens, terrific. If not, you won't even notice.”

On Oct. 15, MeiraGTx released topline data from its clinical bridging study of AAV-GAD for Parkinson's disease, MGT-GAD-025. MGT-GAD-025 is a 6-month, three-arm, randomized, double-blind, sham-controlled study using AAV-GAD drug product manufactured by MeiraGTx at its wholly-owned facilities with its commercial platform process.

SoFi Technologies, Inc. is good, Cramer said.

On Oct. 29, SoFi reported third-quarter adjusted sales of $689.445 million, beating analyst estimates of $632.328 million, according to Benzinga Pro.

The company reported third-quarter earnings of 5 cents per share, beating estimates of 4 cents per share. SoFi raised its full-year revenue forecast from a range of $2.425 billion to $2.465 billion to a new range of $2.535 billion to $2.55 billion versus estimates of $2.45 billion, according to Benzinga Pro.

Price Action:

• MeiraGTx shares gained 4.8% to settle at $6.73 on Thursday.
• Jabil shares fell 0.3% to close at $137.30 on Thursday.
• SoFi shares gained 0.8% to settle at $11.90 during the session.

Read Next:

• How To Earn $500 A Month From Nvidia Stock After Trump Win

Image: Shutterstock

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Celestica Inc. CLS has gained a phenomenal 191.4% over the past year compared with the industry’s growth of 30.7%. It has also outperformed peers like Flex Ltd. FLEX and Jabil Inc. JBL over this period.

With more than 25 years of experience in manufacturing backed by a simplified and optimized global network, Celestica is committed to delivering next-generation, cloud-optimized data storage and industry-leading networking solutions to help customers balance performance, power efficiency and space as technologies evolve. It boasts a diverse portfolio of products that are integral to AI (artificial intelligence) applications.

One-Year Price Performance

CLS Rides on Portfolio Strength

Celestia has benefited from the ongoing generative AI boom, thanks to the solid demand trends for AI/ML (machine learning) compute and networking products from hyperscale customers. In addition to the high-performance 800G family of network switches (which are vital for data centers that power AI applications) and storage solutions like the SC6100 controller and SD6200 platform (which provide efficient and scalable data storage for AI), Celestia offers Photonic Fabric – an optical compute and memory fabric solution capable of supercharging AI infrastructure. This transformational solution provides a foundational technology to advance AI while maintaining scalable, sustainable and profitable business models.

By integrating next-generation networking products with silicon photonics packaging solutions, Celestica aims to optimize supply chain solutions to reduce time to market. The data center switches combined with optical transceivers have the potential to handle and sustain high volumes of both inbound and outbound network traffic and cater to the demand for data center bandwidth for supporting AI/ML and data analytics applications.

Celestica recently launched DS4100 – a 1U 800G per port top-of-rack, leaf/spine switch – to cater to the high-bandwidth demands of data center networking across the enterprise, service provider and cloud provider domains. Designed with Broadcom Inc. AVGO TH4-12.8T switch chipset, the latest addition to the Hardware Platform Solutions portfolio will help Celestica offer a comprehensive 800G data center switch lineup for demanding applications with the redundancy and flexibility required of modern data centers. Such state-of-the-art portfolio additions have helped the company to record healthy top-line growth over the past few years.

CLS Expands Production Capabilities

With the proliferation of AI-based applications and generative AI tools, business enterprises are being increasingly forced to scale future computing platforms to address the burgeoning AI workloads with low-power, high-bandwidth data transfer. This, in turn, is leading to an exponential growth in I/O bandwidth.

To strengthen its market-leading position of AI-enabled products, Celestia is currently developing more than 100,000 square feet of additional capacity in Thailand. Moreover, it is adding 80,000 square feet of incremental capacity in Malaysia to augment its production capabilities. Celestia is also working with industry leaders to commercialize technologies such as On-Board Optics and Co-Packaged Optics to address the demand for speed and cost-efficiency amid the evolving technology landscape.

Estimate Revision Trend

Earnings estimates for Celestia for 2024 have moved up 40.5% to $3.85 over the past year, while the same for 2025 has improved 32.6% to $4.43. The positive estimate revision depicts optimism about the stock’s growth potential.

End Note

As the company scales up production volumes and costs go down, possible uses for silicon photonics are likely to soar across several industries, including automotive, data center and high-performance computing, telecommunications, medical, aerospace and defense.

The stock delivered a trailing four-quarter average earnings surprise of 13.2%. It has a VGM Score of A. Celestia currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.

Zacks Investment Research

Jabil (JBL) ended the recent trading session at $127.30, demonstrating a -0.29% swing from the preceding day's closing price. The stock's performance was behind the S&P 500's daily loss of 0.28%. Elsewhere, the Dow saw a downswing of 0.61%, while the tech-heavy Nasdaq depreciated by 0.33%.

The electronics manufacturer's shares have seen an increase of 4.94% over the last month, surpassing the Computer and Technology sector's gain of 2.1% and the S&P 500's gain of 0.41%.

The investment community will be closely monitoring the performance of Jabil in its forthcoming earnings report. The company's upcoming EPS is projected at $2.04, signifying a 21.54% drop compared to the same quarter of the previous year. Alongside, our most recent consensus estimate is anticipating revenue of $6.6 billion, indicating a 21.29% downward movement from the same quarter last year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $8.64 per share and revenue of $27.01 billion, indicating changes of +1.77% and -6.48%, respectively, compared to the previous year.

Investors should also pay attention to any latest changes in analyst estimates for Jabil. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has remained unchanged. Jabil presently features a Zacks Rank of #4 (Sell).

Looking at its valuation, Jabil is holding a Forward P/E ratio of 14.78. This valuation marks a discount compared to its industry's average Forward P/E of 16.52.

Also, we should mention that JBL has a PEG ratio of 1.37. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Electronics - Manufacturing Services industry had an average PEG ratio of 1.36 as trading concluded yesterday.

The Electronics - Manufacturing Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 10, putting it in the top 4% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Zacks Investment Research

As the tech sector heads into Q4 with factors like recent market corrections, profit-taking after a volatile year, and stronger-than-expected earnings in sub sectors like cloud computing and semiconductors, the companies are showing signs of potential rebound.

Amid this backdrop, investors looking for an opportunity to invest might consider adding strong fundamental tech stocks, TD SYNNEX Corporation , Jabil Inc. , and Dropbox, Inc. , as they are trading at discounts.

With market sentiment starting to improve and economic data stabilizing, there has been a bull market momentum for tech stocks. Out of eleven S&P 500 sectors, the information technology sector is ranked ninth, where it is the largest sector, comprising nearly 32% of the index’s value.

As companies lean more into digital transformation, tech stocks in software, hardware, and cloud sectors are anticipated to benefit from increasing demand. For the tech sector specifically, analysts are optimistic about a potential return to modest growth in 2024, with more robust prospects for 2025. As per the Deloitte report, economists project that AI-related investments will reach $200 billion globally by 2025.

According to Statista, the global IT services market is anticipated to reach $1.88 trillion by 2029, growing at a CAGR of 5.8%. Moreover, analysts expect growth-oriented stocks to recover, especially those with proven innovation and robust cash flows, setting the stage for undervalued tech stocks to gain renewed interest.

Considering these conducive trends, let’s assess the fundamentals of the three abovementioned Technology - Services stocks, starting with the third choice.

Stock #3: TD SYNNEX Corporation (SNX)

SNX operates as a global distributor and solutions aggregator for the IT ecosystem. It has two primary solution portfolios: Endpoint Solutions and Advanced Solutions. The company provides personal computing devices, endpoint technology software, and a range of data center technologies, including hybrid cloud, security, storage, networking, servers, and computing components.

On October 15, SNX’s subsidiary, Hyve Solutions Corporation, announced the launch of its Orion product line featuring the NVIDIA HGX platform. These solutions are optimized for the NVIDIA Hopper platform and are fully compatible with the NVIDIA Blackwell platform, ensuring customers address both present and emerging AI computational needs. The new launch offers a seamless solution to the customers.

On October 10, SNX launched its Destination AI Practice Accelerator to fast-track AI go-to-market efforts and monetization for partners. This launch enables partners to identify AI opportunities for their end customers and build an AI practice to meet those needs with a customized strategy and support.

In terms of forward non-GAAP P/E, SNX is trading at 9.86x, 58.9% lower than the industry average of 24.00x. Likewise, the stock’s forward EV/Sales and Price/Sales multiples of 0.22 and 0.17 are 92.4% and 94.2% lower than their respective industry averages of 2.95 and 2.93.

In the fiscal third quarter that ended on August 31, 2024, SNX’s revenue increased 5.2% year-over-year to $14.68 billion. The company reported an operating income[AD1] of $302.88 million, indicating a 26.1% growth from the prior-year quarter.

SNX’s net income came in at $178.56 million, up 28.2% year-over-year, while its non-GAAP earnings per share grew 2.9% from the year-ago value to $2.86.

Analysts expect SNX’s revenue for the fiscal year (ending November 2024) to increase marginally year-over-year to $57.90 billion, while its EPS for the same period is expected to grow 3.53%from the prior year’s period to $11.66.

The stock has gained 24.2% over the past year and 14.4% over the past nine months to close the last trading session at $115.50.

SNX’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

SNX has a B grade for Value and Sentiment. It is ranked #18 out of 77 stocks in the Technology - Services industry. Click here to see the additional ratings for SNX (Growth, Momentum, Stability, and Quality).

Stock #2: Jabil Inc. (JBL)

JBL is a worldwide provider of manufacturing services and solutions. It operates in two segments: Electronics Manufacturing Services and Diversified Manufacturing Services. The company specializes in electronics design, production, product management, circuit design, firmware development, prototyping, and the design of plastic and metal enclosures with integrated electro-mechanical components like PCBA.

On October 14, JBL introduced an expansion of its server portfolio with the J421E-S and J422-S servers, powered by AMD 5th Generation EPYC and Intel Xeon 6 processors. This addition is efficient, high in performance, and optimized for AI, FinTech, and cloud applications.

On October 3, JBL completed its acquisition of Mikros Technologies LLC, a leader in the engineering and manufacturing of liquid cooling solutions for thermal management. This acquisition will allow JBL to extend its range of services and will also help its customers manage the intense thermal requirements of their current and next-generation products.

In terms of forward non-GAAP P/E, JBL is trading at 15.07x, 37.2% lower than the industry average of 24.00x. Likewise, the stock’s forward EV/Sales and Price/Cash Flow multiples of 0.58 and 0.53 are 80.2% and 81.8% lower than the industry averages of 2.95x and 2.93x, respectively.

JBL’s net revenue for the fiscal 2024, which ended on August 31, stood at $28.88 billion. Its operating income grew 31% from the prior year’s period to $2.01 billion.

The company’s net income attributable rose 69.7% from the year-ago value to $1.39 billion, while its EPS stood at $11.17, up 85.5% year-over-year. In addition, JBL’s adjusted free cash flow rose 2.8% from the year-ago value to $1.06 million.

Street expects SNX’s revenue for the fiscal third quarter (ending May 2025) to increase marginally year-over-year to $6.81 billion. Its EPS for the same period is expected to register a 20.1% growth from the prior year, settling at $2.27. In addition, it surpassed the EPS in three of the trailing four quarters, which is promising.

JBL shares have surged 17.1% over the past three months and 11.6% over the past six months to close the last trading session at $127.67.

It’s no surprise that JBL has an overall rating of B, equating to a Buy in our POWR Ratings system. It has an A grade for Momentum and a B for Growth, Value, and Quality. Out of 77 stocks in the same industry, JBL is ranked #8.

Beyond what is stated above, we’ve also rated JBL for Stability and Sentiment. Get all JBL’s ratings here.

Stock #1: Dropbox, Inc. (DBX)

DBX provides tools to help distributed teams prioritize, get organized, and keep work moving securely from anywhere. The company’s platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app and upgrade to a paid subscription plan for premium features.

On October 15, DBX announced Dropbox Dash for Business, an AI-powered universal search product. This launch makes it easy for teams to find, organize, share, and secure company information, which helps save time and cost.

In terms of forward non-GAAP P/E, DBX is trading at 11.60x, which is 51.7% lower than the industry average of 24.00x. The stock’s forward Price/Cash Flow ratio of 8.88x is 58.5% below the industry average of 21.38x. Also, its forward EV/EBITDA multiple of 9.31 compares to the industry average of 14.51x.

For the second quarter of 2024, which ended on June 30, DBX’s total revenues increased marginally year-over-year to $634.50 million. Its non-GAAP income from operations stood at $227.90 million, indicating a 6.9% growth from the prior-year quarter, with a non-GAAP operating margin of 35.9% (up 170 bps year-over-year).

DBX’s non-GAAP net income amounted to $194.10 million and $0.60 per share, reflecting 11.6% and 17.6% year-over-year increases, respectively. Also, the company’s non-GAAP free cash flow grew by 21.7% from the year-ago value to $224.7 million.

The consensus revenue estimate of $642.81 million for the fiscal fourth quarter (ending December 2024) represents a marginal increase year-over-year. The consensus EPS estimate of $0.53 for the same quarter indicates a 5.1% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

Over the past three months, the stock has gained 11.9%, closing the last trading session at $25.98.

DBX’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

It also has an A grade of Quality and a B for Value. Within the Technology - Services industry, it is ranked #6. Click here to see DBX’s ratings for Growth, Momentum, Stability, and Sentiment.

What To Do Next?

Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:

10 Stocks to SELL NOW! >

JBL shares were trading at $128.32 per share on Monday afternoon, up $0.65 (+0.51%). Year-to-date, JBL has gained 0.93%, versus a 21.27% rise in the benchmark S&P 500 index during the same period.