With The Head For The Hills Crowd In Control, Jabil's Important Implications Are Brushed Aside

Last night, Jabil announced results for its fiscal third quarter ended in May that came in ahead of Street estimates. The company reported earnings of $0.31 per share on revenues of $4.5 billion versus Street expectations of $0.29 per share on revenues of $4.4 billion.


For the current quarter (FQ4:17), Jabil guided earnings to between $0.50 and $0.74 per share or $0.62 per share at the mid-point. The company said revenues would come in between $4.7 billion and $5.1 billion or $4.9 billion at the mid-point. The Street was expecting earnings of $0.62 per share on revenues of $4.79 billion.


For FY18, Jabil said that earnings would be around $2.60 per share versus Wall Street expectations of $2.43 per share.


Im pleased with our third quarter results as both business segments performed quite well, said CEO Mark Mondello. In Diversified Manufacturing Services (DMS), the team delivered exceptional execution and cost controls against product road maps exhibiting massive scale and complexity, while we continued to see strong double-digit growth in healthcare and packaging. At the same time, our Electronics Manufacturing Services (EMS) team continues to do an excellent job building broad revenue diversification, while developing end-market domain expertise, resulting in solid margin expansion.


For those that might have forgotten, Apple accounts for almost 25-30% of Jabil's DMS segment. Jabil is guiding the current quarter for the DMS segment higher by 26% year-on-year, the EMS segment higher by 2% year-on-year for the quarter and total revenues up 11% year-on-year. The DMS guide higher year-on-year is probably largely due to Apple getting ready for the launch of its new iPhone this fall.


Near-term, we expect to deliver the best fourth quarter in the companys history in terms of core operating income. Beyond that, our forecast suggests the growth in both DMS and EMS in fiscal 2018 will result in core EPS in the neighborhood of $2.60. We remain committed to complete our two-year capital return framework plan, achieve $3.00 per share in core EPS in fiscal 2019, and ultimately become the worlds most technologically advanced manufacturing solutions company, said Mondello.


The words "best fourth quarter in the company's history" should be very telling to astute investors as far as implications/ramifications for Apple are concerned. I am sure most investors remember how Apple's results turned out for the December quarter and the subsequent rise in shares.


An article back in December discussing the ramifications of Jabil's results on Apple's CQ4:16 results could be worth a read, especially given the doom and gloom that has descended on the Street in the last week or so.


Could help investors maybe sift through the noisy negativity right now.


(Long aapl, long and short options)

Original Link
https://www.forbes.com/sites/jaysomaney/2017/06/15/with-the-head-for-the-hills-crowd-in-control-jabils-important-implications-are-brushed-aside/#6ceb724a1d7b