To The Moon

$Jabil Circuit(JBL)$ is expected to release its quarterly earnings result for fiscal Q2 2025 on 20 March 2025 before the market open.

The consensus estimate is forecasting JBL revenue to come in at $6.41 billion, which represent a 5.25% decline compared to the same period last year.

The earnings per share is anticipated to be $1.83 which will mark a 7.74% rise compared to the same quarter period last year.

Jabil (JBL) Last Neutral Earnings Call Saw 3.32% Increase In Share Price

JBL gave a neutral earnings call on 18 Dec 2024 which saw its share price rise by 3.32%.

The earnings call reflected a balanced performance with solid revenue and cash flow growth, particularly in the AI and Intelligent Infrastructure segments. However, challenges remain in renewable energy, EV markets, and the connected living segment post mobility divestiture.

Jabil (JBL) Guidance On Share Repurchase and Free Cash Flow

During the Jabil Q1 2025 earnings call, the company provided guidance for the upcoming quarter and fiscal year. Revenue for Q2 FY '25 is anticipated to be between $6.1 billion and $6.7 billion, with core operating income projected between $286 million and $346 million. GAAP operating income is expected to range from $183 million to $263 million. Core diluted EPS is estimated to range from $1.60 to $2, while GAAP diluted EPS is anticipated to be between $0.69 and $1.27. For the full fiscal year 2025, Jabil forecasts approximately $27.3 billion in revenue with core operating margins of 5.4%, and core EPS is expected to be $8.70.

The company continues to manage its inventory efficiently with net inventory days within the target range of 55 to 60 days, and it anticipates robust free cash flow for the year at $1.2 billion. The company remains committed to completing the current $1 billion share repurchase authorization by the end of FY '25.

Key Metrics To Watch For Jabil (JBL) Earnings

Revenue & Earnings

YoY/QoQ Growth: Q1 revenue came in at $7 billion, up 1% year-on-year excluding the Mobility divestiture. Core operating margins were at 5% despite hurricane impacts.

The Intelligent Infrastructure segment saw revenue of $2.5 billion, up 5% year-on-year, driven by strong demand in AI-related cloud and data center infrastructure. Excluding the Mobility divestiture, this segment showed a revenue growth of approximately 12% year-on-year.

EPS vs. Estimates: Beating consensus EPS (adjusted for stock-based compensation or restructuring costs) would signal operational efficiency, while misses might reflect margin pressures or project delays.

The Connected Living segment's revenues are expected to be down 20% year-over-year, primarily due to the mobility divestiture.

Margin Trends

Gross Margin: Monitor impacts from component cost inflation (e.g., semiconductors), supply chain stabilization, or pricing discipline. Adjusted free cash flow for Q1 was $226 million, with an expectation of $1.2 billion for the year.

Continued softness in renewable energy and EV markets is expected, impacting revenue projections for the Regulated Industries segment.

Regulated Industries revenue was down 7% year-on-year due to continued weakness in renewable energy and EV markets.

Operating Margin: AI-related revenues are projected to increase from $5-6 billion to $6.5 billion, indicating a strong growth trajectory.

Contextual Drivers

End-Market Demand

Tech/Consumer Electronics: Softness in smartphones/laptops vs. growth in AI/cloud infrastructure (e.g., data center components).

Automotive: Strength in electric vehicle (EV) components and advanced driver-assistance systems (ADAS).

Healthcare: Demand for medical devices and diagnostics equipment post-pandemic.

Industrial/5G: IoT and 5G infrastructure deployments.

Supply Chain Dynamics

Stabilization in semiconductor availability and logistics costs.

Geopolitical risks (e.g., U.S.-China tensions, regional diversification of manufacturing).

Customer Concentration

Dependency on large clients (e.g., Apple, Cisco) and their product cycles. Diversification into newer industries (e.g., renewable energy) could reduce risk.

Strategic Initiatives

1. High-Growth Verticals:

   Focus on AI/ML hardware, EV components, and healthcare technology. Jabil’s investments in these areas could drive long-term growth.

   Partnerships with hyperscalers (e.g., AWS, Google Cloud) for data center solutions.

2. ESG & Sustainability:

   Progress on circular manufacturing, carbon neutrality goals, and ethical sourcing—key for retaining ESG-focused clients and investors.

3. Capital Allocation:

   Share buybacks or debt reduction, given Jabil’s strong free cash flow. Recent history includes returning capital to shareholders while funding growth initiatives.

Competitive Landscape

• Peers: Compare results to Flex Ltd. (FLEX), Foxconn (Hon Hai), and Sanmina (SANM). Jabil’s margins and diversification often outpace peers.

• Differentiation: Jabil’s engineering expertise and agility in scaling production for complex products (e.g., custom silicon, EV batteries).

Jabil (JBL) Price Target

Based on 6 Wall Street analysts offering 12 month price targets for Jabil in the last 3 months. The average price target is $173.00 with a high forecast of $188.00 and a low forecast of $152.00. The average price target represents a 25.05% change from the last price of $138.35.

We might need to watch the JBL management comment during the earnings call as we might be seeing order backlog where there will be a commentary on pipeline strength, especially in AI/cloud and automotive.

There will be also the inventory adjustments where customer inventory digestion (e.g., post-COVID chip stockpiling) and its impact on near-term demand. Another important factor that might affect in the share price movement is the pricing power which will show JBL ability to pass through component cost increases to clients.

Technical Analysis - Exponential Moving Average (EMA)

We are seeing a crossover formed for the RSI near the oversold region, so I am expecting JBL to make a bullish reversal, but the daily uptrend attempt might be challenging as JBL is just above the 200-day period.

We need a stronger momentum from JBL today (18 Mar) and 19 Mar to show that investors have confidence with the company, and here are two scenarios that could move the share price for JBL, unless we have a strong bounce from the market today.

Bull Case: Strong beats on revenue/EPS, raised guidance driven by AI/EV demand, margin expansion, and new customer wins. Stock rallies on "growth re-rating."

Bear Case: Weakness in consumer electronics, inventory corrections in auto/industrial sectors, and FX headwinds. Shares decline on lowered growth expectations.

Summary

Jabil’s fiscal Q2 2025 results will hinge on its ability to capitalize on secular trends (AI, EV, healthcare) while navigating cyclical pressures in consumer electronics and industrial markets. Strong margins, diversified growth drivers, and resilient guidance would reinforce its position as a key enabler of tech and industrial innovation. Conversely, softer demand or supply chain disruptions could weigh on sentiment.

I would think that JBL would need to show that they are able to capture the market with AI enhanced services, while the electronic sector might be experiencing a rotation, JBL strong guidance might move the share price higher.

Appreciate if you could share your thoughts in the comment section whether you think JBL would be able to give a stronger guidance for 2025 on the back on AI demand.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.