How Jabil Circuit, Inc. (JBL) Can Push Higher

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On Wednesday, Jabil Circuit, Inc. (NYSE:JBL) will release its latest quarterly results. Even though the tech manufacturer has tried to emerge from the shadows by diversifying beyond its largest customer, Jabil Circuit, Inc. (NYSE:JBL) still faces plenty of competition from other companies seeking to stand behind some of the most popular products in technology.

Jabil Circuit, Inc. (NYSE:JBL)

Jabil Circuit is one of many companies focusing on making components for other businesses, giving up its own chance at the limelight in order to facilitate production for its customers and their innovative technological products. But with the nature of the contract-electronics business being fairly cutthroat, Jabil has to be on guard constantly to protect and preserve its lucrative relationships with its customers. Let’s take an early look at what’s been happening with Jabil Circuit, Inc. (NYSE:JBL) over the past quarter and what we’re likely to see in its report.

Stats on Jabil Circuit

Analyst EPS Estimate $0.54
Change From Year-Ago EPS (16%)
Revenue Estimate $4.4 billion
Change From Year-Ago Revenue 3.6%
Earnings Beats in Past 4 Quarters 1

Source: Yahoo! Finance.

How Jabil Circuit can push earnings back in the right direction
Analysts have gotten less optimistic about Jabil Circuit, Inc. (NYSE:JBL)’s earnings prospects recently, reducing their estimates for the May quarter by $0.08 per share and their full-year fiscal 2013 consensus by double that figure. The stock has done a good job of treading water, though, rising about 2% since mid-March.

Jabil is best known for its production of the aluminum case that houses the iPhone 5. The company has done its best to try to diversify away from its smartphone focus, with its purchase of plastics-maker Nypro aiming to help it move more broadly into consumer electronics as well as the unrelated field of health care. Yet Jabil Circuit, Inc. (NYSE:JBL)’s diversified manufacturing services segment produces by far the most impressive margins for the company, highlighting its continued reliance on the business.

As a result, the big threat that Jabil constantly faces is the potential loss of its customers. Rival Flextronics International Ltd. (NASDAQ:FLEX) suffered a huge hit last summer when major customer Research In Motion Ltd (NASDAQ:BBRY) chose to stop using the company to help it make its namesake smartphones, citing cost-cutting efforts in its decision to make changes to its supply chain arrangements. Flextronics International Ltd. (NASDAQ:FLEX) has seen substantial revenue declines as a result, even despite BlackBerry’s relative weakness in the smartphone space in recent years. More importantly, the move came at the worst possible time, as Research In Motion Ltd (NASDAQ:BBRY) has subsequently revived in the face of its latest product launch. Jabil Circuit, Inc. (NYSE:JBL) counts Research In Motion Ltd (NASDAQ:BBRY) as a customer as well, so it should be interesting to see how that relationship has developed in the wake of the Z10 and Q10 smartphone releases.

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