Electronics contract manufacturer Jabil saw its shares soars to a record high Thursday after announcing better-than-expected earnings before markets opened. Jabil stock surged nearly 20% despite sales and a revenue outlook that came in short of views.
The St. Petersburg, Fla.-based company said it earned an adjusted $2.45 a share on sales of $8.46 billion in the quarter ended Aug. 31. Analysts polled by FactSet had expected Jabil earnings of $2.32 a share on sales of $8.54 billion. On a year-over-year basis, Jabil earnings increased 5.6% while sales declined 6.3%.
For the current quarter, Jabil forecast adjusted earnings of $2.60 a share on sales of $8.7 billion. That's based on the midpoint of its forecast.
Analysts were looking for earnings of $2.33 a share on sales of $9.18 billion for the company's fiscal first quarter, which ends in November. In the same quarter last year, Jabil earned $2.31 a share on sales of $9.6 billion.
On the stock market today, JBL stock closed up 18.8% to 124.95. Shares hit an all-time high of 126.01 earlier in the day before retreating slightly.
Two Business Segments
Following the earnings, Barclays raised its price target for JBL stock to 144, from 134.
"We continue to see strong upside potential for JBL shares as the focus on key growth markets is paying off, along with its industry-leading ROIC (return on invested capital) at 30%," wrote Barclays analyst George Wang in a client note Thursday. Further, Wang cited partnerships with Tesla , Johnson & Johnson (JNJ) and Amazon Cloud as providing upside.
Also, Jabil announced its board had approved an increase in share repurchase program to buy up to $2,5 billion in JBL common stock. The repurchase program had $776 million outstanding as of Aug. 31, the company said.
Jabil has two business segments: electronics manufacturing and diversified manufacturing services. The electronics manufacturing unit includes gear for cloud computing, networking, data storage, industrial and other applications. The diversified manufacturing unit, meanwhile, makes automotive, health care, mobile and other devices.
In the fourth quarter, sales in the electronics manufacturing unit fell 13% while sales in the diversified manufacturing unit remained consistent, the company said.
Agreement To Sell Mobility Unit
Prior to its earnings, Jabil announced Wednesday that it reached a definitive agreement to sell its mobility unit to China-based BYD Electronic, part of electric-vehicle giant BYD, for $2.2 billion. Before that, the companies announced a preliminary deal on Aug. 27.
JBL stock jumped on the initial announcement, climbing 9% the next day. The company said the deal "will provide opportunities for further investment in electric vehicles, renewable energy, health care, (artificial intelligence) cloud data centers, and other end markets."
Further, analysts saw the agreement as a positive step in the company's strategy to lower its exposure to major customer Apple and operations in China.
Jabil makes metal frames for iPhones and other Apple devices. Last year, Apple accounted for 19% of Jabil's total revenue.
JBL Stock: Up 54% This Year
Coming into trading Thursday, JBL stock had climbed 54% on the year.
Further, the company has an IBD Composite score of 89 out of 99, according to IBD Stock Checkup. The company ranks fifth out of 15 stocks in IBD's Electronics-Contract Manufacturing industry group.
Also, JBL is on the IBD Tech Leaders list.
