Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Jabil Circuit, Inc. (JBL), BlackBerry Ltd (BBRY), Apple Inc. (AAPL): A Few Reasons Why This Stock Might Disappoint Next Week

Page 1 of 2

Electronics manufacturing services provider Jabil Circuit, Inc. (NYSE:JBL) has been on a good run of late. Shares are up around 35% in the last five months even though the company has been issuing disappointing guidance figures.

Investors probably see its restructuring and cost cutting moves as positives. But with Jabil Circuit, Inc. (NYSE:JBL) scheduled to release its fourth-quarter earnings on Sept. 25, it would be prudent to check if the company has enough tailwinds to continue its momentum.

Jabil Circuit, Inc. (NYSE:JBL)

What to expect

Jabil Circuit, Inc. (NYSE:JBL) is expected to post earnings of $0.54 per share on revenue of $4.53 billion. The expected revenue is 4.50% higher than last year’s period, while earnings would be same as last year’s period. Estimates have dropped considerably since Jabil’s last earnings call and are now in line with the company’s own outlook. Hence, Jabil shouldn’t have much difficulty in at least meeting the estimates.

What next?

Earnings will not be important since Jabil Circuit, Inc. (NYSE:JBL) is expected to beat the already low estimates. However, investors will be looking for concrete evidence that the business is improving and cost-cutting is helping margins.

But, a look at its three business segments sends out mixed signals. For instance, Jabil Circuit, Inc. (NYSE:JBL)’s High Velocity business performed really well in the third quarter — with revenue increasing 23% from the prior-year period and the segment contributing 29% to overall revenue. This business should have improved 15% from last year’s fourth quarter if Jabil’s guidance is taken into account.

However, High Velocity was riding on BlackBerry Ltd (NASDAQ:BBRY)‘s latest phones. Jabil was selected as a “go forward partner” for BlackBerry 10 in 2012. As the Canadian smartphone maker ramped up production and moved to launch the new devices, Jabil got a shot in the arm.

But, with BlackBerry Ltd (NASDAQ:BBRY)’s move at regaining its footing in the smartphone industry stuttering, a downbeat guidance from the High Velocity segment might be in the cards. Canaccord Genuity analyst Mike Walkley is of the opinion that sales of the BlackBerry 10 devices have been “very soft” and “weak.” Even the QWERTY keyboard-toting Q10 hasn’t clicked and it is rumored that T-Mobile has been removing BlackBerry Ltd (NASDAQ:BBRY) 10 devices from its stores on account of poor sales.

Moving on to the Diversified Manufacturing Services (DMS) business, the outlook over here might be upbeat. The segment accounts for 40% of overall revenue and has been boosted by the presence of Apple Inc. (NASDAQ:AAPL) as a client. Jabil started manufacturing the casing for the iPhone 5 last year and probably in anticipation of further business from Apple, it acquired custom plastics manufacturer Nypro.

Now, Nypro specializes in the health care, packaging, and consumer electronics sectors and it might be possible that Apple Inc. (NASDAQ:AAPL) tapped Jabil for the iPhone 5C, which is “unapologetically plastic.” However, Apple hasn’t released the pre-order numbers of the iPhone 5C, which it ideally does early Monday after the weekend when the device goes on pre-order.

This might be construed as an ominous sign. Apple Inc. (NASDAQ:AAPL) shares have retreated since the iPhone event took place last week and the lack of data from Cupertino might add to investors’ worry further. For instance, the device was still available for pre-order on Apple’s website as of this writing on Monday while last year, the iPhone 5 was sold out within an hour.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!