Water-Logged And Getting Wetter: Jabil Circuit (JBL)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Jabil Circuit ( JBL) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Jabil Circuit as such a stock due to the following factors:

  • JBL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.6 million.
  • JBL has traded 2.4 million shares today.
  • JBL traded in a range 209.1% of the normal price range with a price range of $0.73.
  • JBL traded below its daily resistance level (quality: 40 days, meaning that the stock is crossing a resistance level set by the last 40 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on JBL:

Jabil Circuit, Inc., together with its subsidiaries, provides electronic manufacturing services and solutions worldwide. The company operates in three segments: Diversified Manufacturing Services, Enterprise & Infrastructure, and High Velocity Systems. The stock currently has a dividend yield of 1.5%. JBL has a PE ratio of 24.0. Currently there are 5 analysts that rate Jabil Circuit a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Jabil Circuit has been 1.6 million shares per day over the past 30 days. Jabil Circuit has a market cap of $4.2 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.00 and a short float of 3.1% with 2.77 days to cover. Shares are up 19.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Jabil Circuit as a hold. Among the primary strengths of the company is its compelling growth in net income over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 275.9% when compared to the same quarter one year prior, rising from $50.08 million to $188.26 million.
  • JBL, with its decline in revenue, underperformed when compared the industry average of 3.5%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • JBL's debt-to-equity ratio of 0.72 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 0.61 is low and demonstrates weak liquidity.
  • The share price of JABIL CIRCUIT INC has not done very well: it is down 8.56% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • JABIL CIRCUIT INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, JABIL CIRCUIT INC reported lower earnings of $1.60 versus $1.87 in the prior year. For the next year, the market is expecting a contraction of 65.3% in earnings ($0.56 versus $1.60).

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