Jabil is hovering below its 50-day moving average ahead of its fourth-quarter results on Sept. 25. Shares of the artificial intelligence play are also in a consolidation pattern with a buy point of 232.84. The AI stock is Tuesday's selection for IBD 50 Stocks To Watch.
Jabil operates across more than 25 countries. It designs, develops, and manufactures electronic products for several industries, including health care, defense and aerospace, and semiconductor equipment, as well as data centers.
Shares have formed a consolidation pattern after rallying to an all-time high on strong third-quarter results on June 17. This is a late-stage base and may not net the higher gains than early-stage ones do.
Earnings growth accelerated from the second quarter and grew 35% from the prior year to $2.55 per share. Sales increased 16% to $7.8 billion after seven quarters of declines.
The company touted outperformance in several end-markets, such as cloud, data center infrastructure, and capital equipment, amid "softness" in areas like electric vehicles, renewables, and 5G wireless technology.
Jabil also said it would invest $500 million over the next several years to expand its services in the AI infrastructure and cloud industries. In October, the company acquired privately held Mikros Technologies, another play in AI data center infrastructure and energy storage.
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For Jabil's fourth quarter, analysts estimate earnings of $2.91 per share, or 27% growth year over year. They also expect the turnaround in revenue growth to continue, with estimates of $7.6 billion, representing a 9% increase from the same quarter a year ago.
Jabil is in the electronics-contract manufacturing group. The group holds 12th place among Investor's Business Daily's 197 industry groups.
Jabil has an IBD Composite Rating of 93, and its Earnings Per Share Rating of 95 out of 99 is a result of accelerating earnings in the two most recent quarters. The 95 rating stands out as earnings growth had slowed in the prior four quarters.
Shares have outperformed 92% of other stocks in the IBD database over the past 52 weeks. As of Monday's closing price, shares had gained 50% year to date.
Mutual funds hold 57% of outstanding shares. More funds have bought the stock in six out of the past seven quarters. But they have not been net buyers of the stock in the recent 13 weeks, giving Jabil stock an Accumulation/Distribution Rating of D+.
In the IBD mutual fund index, the Fidelity Contrafund holds shares of Jabil.
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