Jabil Circuit Results Last Week Gave Apple Investors A Second Heads Up In A Row

Back on December 15 when Jabil Circuit reported numbers for its fiscal first quarter, savvy investors were quick to pick up on the positive implications for Apple of Jabil's results and guidance.


The company reported earnings back then that beat the consensus by a nickel per share and revenues that were ahead of Street estimates by $200 million.


In terms of guidance, Jabil stated that revenues for the fiscal second quarter ending in February would be $4.35 billion and earnings of $0.46 per share, both at mid-points.


Jabil further guided Diversified Manufacturing Services revenue down 2% and Electronics Manufacturing Services revenue consistent year-on-year.


Management said at the time, "In particular, we saw strength in our healthcare, packaging and consumer lifestyles businesses within our DMS segment, combined with yet another solid quarter of execution from our EMS segment."


The day after Jabil reported its numbers on December 15, shares of the company closed at $24.15, up $2.58 per share.


Apple shares closed the same day at $115.97 per share.


Last week, Jabil reported earnings for its February quarter (FQ2) of $0.48 per share on revenues of $4.4 billion versus Street consensus of $0.46 per share and $4.37 billion. For the May quarter (FQ3), Jabil guided the Street to earnings of $0.29 per share and revenues of $4.4 billion, in-line with expectations.


"The performance of our team during the second quarter was exceptional with nearly all of our businesses delivering at or above plan," said Jabil CEO Mark Mondello. "I believe our results reflect the effectiveness of our strategy to increase the quality and diversification of our cash flows and earnings."


Jabil said it is forecasting FQ3 diversified manufacturing services (DMS) revenue up 9% y/y and Q3 electronics manufacturing services (EMS) revenue down 1% y/y.  Just incidentally, Apple makes up a large portion of Jabil's DMS revenues, averaging more than 25% over the last two year period.


Hmm, DMS revenues forecasted to be up 9% year-on-year.


Shares of Jabil closed this past week at $28.80.


Apple shares closed this past week at $139.99 per share.


Investors in Apple are getting a second heads up thanks to Jabil's results for the second quarter in a row.


Words to the wise.


(Long aapl, long and short options)

Original Link
https://www.forbes.com/sites/jaysomaney/2017/03/19/jabil-circuit-results-last-week-gave-apple-investors-a-second-heads-up-in-a-row/#41423dc95b26