How Poor Guidance Sank Jabil Circuit

By Chris Lange Updated Jan 13, 6:45AM EST · Published Jun 16, 6:36AM EDT

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How Poor Guidance Sank Jabil Circuit — © Thinkstock

Jabil Circuit Inc. (NYSE: JBL) reported fiscal third-quarter financial results after markets closed on Wednesday. The company said that it had $0.17 in earnings per share (EPS) on $4.3 billion in revenue. Thomson Reuters had consensus estimates that called for $0.16 in EPS on revenue of $4.18 billion. In the same period of last year, the company posted EPS of $0.49 and $4.36 billion in revenue.

A major part of this report was that the board of directors authorized a $400 million share repurchase program. The overarching capital allocation framework is designed to return roughly 40% of cash flows from operations through dividends and share repurchases over the next two years, not to exceed $1 billion in total.

Despite earnings being positive and the company looking to return more capital to shareholders, the outlook for the coming quarter was what initially drove the company down in Wednesday’s after hours.

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In terms of guidance for the fiscal fourth-quarter, the company expects to have EPS in the range of $0.15 to $0.35 and revenues between $4.15 billion and $4.35 billion. The consensus estimates are $0.53 in EPS on $4.66 billion in revenue for the current quarter.

Mark Mondello, CEO of Jabil Circuit, commented on earnings:

Our Electronics Manufacturing Services business performed ahead of plan supported by near-perfect execution during the quarter. However as expected, our third quarter results also reflected a soft environment within our mobility business. These challenges will continue to negatively impact our Diversified Manufacturing Services business for the balance of our fiscal year.

On the books, Jabil Circuit’s cash and cash equivalents totaled $887.0 million at the end of the quarter, compared to $914.0 million at the end of the previous fiscal year.

Shares of Jabil Circuit closed Wednesday at $18.44, with a consensus analyst price target of $21.90 and a 52-week trading range of $16.78 to $26.00. Following the release of the earnings report the stock was down about 3% at $17.95 in the after-hours trading session.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.