Jabil Circuit (NYSE: JBL), a provider of solutions to the electronics industry, as well as a business that counts Flextronics (NASDAQ: FLEX) as a colleague, has been in an uptrend. If you check out a year-to-date chart for the company's stock, you'll understand what I mean. And frankly, I admit that I've been too bearish on this situation. When I pontificated on Jabil's Q3 results, I didn't think the company was a strong idea. Well, it's gone up since then.
So, what should we make of the Q4 results, which were reported Tuesday after the bell? Again, we see big declines. Net sales dropped 15%, and earnings per diluted share on an adjusted basis plunged to 16 cents from the 30 cents seen in the year-ago period.
None of that mattered. The market sent the stock higher in the after-hours session by well over 7%. Why? According to Earnings.com, Wall Street was expecting only 8 cents for the income number. Jabil doubled the estimate. And that's what counts in the earnings game.
Jabil seems to be doing well with cash flow. Cash and cash equivalents increased on the balance sheet, while long-term debt went down. A mighty fine relationship. Plus, projections for future quarters indicate that year-over-year growth might be getting ready for a triumphant return.
As comparisons improve, I think the stock is likely to retain its current momentum. Of course, you've always got to be careful about buying too high.
Still, Jabil should be examined as a trading opportunity. Getting in on a pullback might net you a gain. I do still perceive some risk in terms of the fundamentals, but admittedly, they probably will improve over time.
Disclosure: I don't own any company mentioned; positions can change without notice.
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