I was wrong about Jabil Circuit (NYSE JBL). When I wrote about the tech company's last earnings report, I said I wasn't a buyer. I should have been. The stock rose quite a bit after I presented my thoughts to the world. In fact, the stock closed up well over 7% on Tuesday, settling out to a price of $7.12 per share. Volume was extremely active.
Obviously, investors were setting themselves up ahead of the Q3 release. Jabil earned, on an adjusted basis, 4 cents per share. According to Reuters, the market was only counting on 2 cents per share.
The market wasn't too pleased by the results. At the time of this writing, shares of Jabil were down 3.5% during yesterday's after-hours session. Should we take that as an indicator of things to come for the stock? Guidance and expectations are pretty wide open in terms of Q4. Jabil's management sees a range of between 2 cents per share and 12 cents per share for adjusted profit. The market is looking for 9 cents per share for the fourth quarter.
The range stated by the company doesn't give me a ton of confidence, especially when you juxtapose it with Wall Street's outlook. Sure, I was wrong about Jabil before. Yet, if you read through the press release, you'll see that management remains cautious on the economy. I remain the same way. Jabil beat expectations in Q3, but it made 26 cents per share in the year-ago period compared to 4 cents this year. We have to keep that profit decline in mind, as well as the significant decline in the top line.
Jabil, a provider for solutions related to electronics design and manufacturing, is not at the top of my list of investment ideas. The stock may rise again, but I simply see risk here, especially considering the way the major market indexes have been acting the last few sessions. Best of luck to those who decide to buy this one.
Disclosure: I don't own any company mentioned; positions can change without notice.
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