NEW YORK (
-- Jabil Circuit
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and robust revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and generally poor debt management.
Highlights from the ratings report include:
- The gross profit margin for JABIL CIRCUIT INC is currently extremely low, coming in at 9.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.40% trails that of the industry average.
- JBL's debt-to-equity ratio of 0.69 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that JBL's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.56 is low and demonstrates weak liquidity.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Electronic Equipment, Instruments & Components industry average. The net income increased by 85.7% when compared to the same quarter one year prior, rising from $29.83 million to $55.40 million.
- JABIL CIRCUIT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, JABIL CIRCUIT INC turned its bottom line around by earning $0.78 versus -$5.64 in the prior year. This year, the market expects an improvement in earnings ($2.24 versus $0.78).
Jabil Circuit, Inc., together with its subsidiaries, provides electronic manufacturing services and solutions in the Americas, Europe, and Asia. The company has a P/E ratio of 17.1, equal to the average electronics industry P/E ratio and above the S&P 500 P/E ratio of 16.1. Jabil Circuit has a market cap of $4.3 billion and is part of the
industry. Shares are down 5.8% year to date as of the close of trading on Tuesday.
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