Jabil Circuit Inc. (NYSE: JBL) is scheduled to release its fiscal second-quarter earnings after the closing bell on Tuesday, March 22, 2010. Analysts, on average, expect the company to report earnings of 51 cents per share on revenue of $3.91 billion. In the year ago period, the company reported earnings of 29 cents per share on revenue of $3 billion.
Jabil Circuit, Inc., together with its subsidiaries, provides electronic manufacturing services and solutions in the Americas, Europe, and Asia. It offers electronics and mechanical design, production, product management, and after-market services to companies in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage, and telecommunications industries. Jabil operates in three segments: Diversified Manufacturing Services (DMS), Enterprise & Infrastructure (E&I) and High Velocity Systems (HVS).
In the preceding fiscal-first quarter, the St. Petersburg, Florida-based company's net income was $106.67 million or $0.49 per share, compared with a profit of $28.28 million or $0.13 per share in the year-ago period. On an adjusted basis, the company earned 61 cents per share in the latest quarter. Revenue surged to $4.08 billion from $3.08 billion in the same period last year. Analysts, on average, expected the company to report earnings of $0.55 per share on revenue of $3.96 billion.
At its last earnings call in December, the company said that it expects fiscal second quarter net income in a range from $0.37 to $0.41 per share. GAAP earnings for the second quarter are currently estimated to include $0.03 per share for amortization of intangibles and $0.09 per share for stock-based compensation. The company expects core income for the second quarter to range $0.49 to $0.53 per share. Net revenue for the second quarter is expected to range from $3.85 billion to $3.95 billion. The company also said that it is on track for a record year in fiscal 2011 and sees strong growth in each of its business segments. President and chief executive Tim Main stated that Jabil could be a $20 billion company with operating margins significantly above industry averages by FY 2014 or 2015.
Jabil has benefited from new business wins from major original equipment manufacturers (OEMs) such as Cisco Systems Inc. (NASDAQ: CSCO), a recovery in end-market demand, new programs ramping up and resurgence in IT enterprise spending. Jabil has also benefited from strong growth in the Mobility, Aerospace and Defense, Healthcare, Instrumentation and Industrial, and Networking and Storage segments over the long term. However, intense competition from Benchmark Electronics (NYSE: BHE), Flextronics International Ltd. (NASDAQ: FLEX) and Celestica Inc (NYSE: CLS) and a softer demand environment may continue to weigh on company's results. Also, Jabil’s fairly high level of debt may limit financial flexibility going forward.
Last month, Jabil announced that it has acquired three of its former operations in France and Italy, which were divested in July of 2010. Jabil will establish viable operations at the sites following multiple breaches by the purchaser of those facilities, including their diversion of funds that were specifically designated as working capital. Pursuant to the agreements, Jabil currently expects, based on existing information, to take a one-time charge of $25 million to $40 million to U.S. GAAP earnings in its second fiscal quarter of 2011. This charge is principally the write-off of working capital loans for the operations and other expenses associated with the transaction.
The company's stock currently trades at a forward P/E (fye August 31, 2012) of 7.40 and PEG Ratio (5 yr expected) of 0.76. In terms of stock performance, Jabil shares have gained nearly 10% over the past year.
Full Disclosure: None.
