Jabil Circuit (JBL) Stock Dropping on Lower Earnings Estimate

NEW YORK (TheStreet) -- Shares of Jabil Circuit  (JBL) are dropping 7.15% to $22.59 after Deutsche Bank lowered its 2015 full-year earnings estimate to $1.63 from $1.68 per share.

The firm maintained its price target of $25 and a "hold" rating on Jabil Circuit.

The company released its third quarter earnings results yesterday with revenue of $4.4 billion, and $0.49 earnings per share.

This result indicates that the contract electronics manufacturer missed consensus but beat on the bottom line in the third quarter, and forecast the fourth quarter's results below expectations, according to Barron's.

"Margins continue to be under pressure, in Enterprise & Infrastructure segments, driven by new program ramps and investments in new capacity in China," Deutsche Bank analysts said.

However, margins are positive on growth in fiscal year 2016, driven by continued growth in industrial and favorable mix, Deutsche Bank added.

Jabil Circuit is a provider of electronic manufacturing services and solutions that operates Diversified Manufacturing Services (DMS), Enterprise & Infrastructure (E&I) and High Velocity Systems (HVS).

Separately, TheStreet Ratings team rates JABIL CIRCUIT INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate JABIL CIRCUIT INC (JBL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in net income, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.0%. Since the same quarter one year prior, revenues rose by 20.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 234.3% when compared to the same quarter one year prior, rising from -$38.67 million to $51.95 million.
  • Net operating cash flow has significantly increased by 1888.90% to $336.32 million when compared to the same quarter last year. In addition, JABIL CIRCUIT INC has also vastly surpassed the industry average cash flow growth rate of -28.13%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • JABIL CIRCUIT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JABIL CIRCUIT INC swung to a loss, reporting -$0.03 versus $1.54 in the prior year. This year, the market expects an improvement in earnings ($2.02 versus -$0.03).
  • You can view the full analysis from the report here: JBL Ratings Report

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