Jabil Circuit Earnings Preview: Higher Q2 EPS and Sales Expected

Jabil Circuit (NYSE: JBL) is scheduled to report second-quarter fiscal 2012 results tomorrow, March 20, after the closing bell.

The tech company has reported increasing earnings for three straight quarters and its stock is more than 36% higher than at the beginning of the year. Being an Apple (NASDAQ: AAPL) iPad supplier to has helped that momentum. Investors will be looking for those trends to continue in and following this earnings report.

Expectations

Analysts predict that Jabil Circuit will report that per-share earnings came to $0.58 for the quarter and that revenue totaled $4.1 billion. In the same quarter of last year, the electronic products maker posted $0.54 per share and $3.9 billion in sales. That EPS estimate is a penny more than it was 60 days ago. Note that Jabil Circuit's EPS were in line with consensus estimates in the previous quarter, ending a streak of earnings beats that went back more than ten quarters.

In the first-quarter report, the company said both EPS and revenues rose year-over year. EPS came to $0.65 a share and sales totaled $4.4 billion. That revenue result missed analysts' expectations, though. Jabil Circuit attributed the growth to strength in its Diversified Manufacturing Services and High Velocity segments. It said an emphasis on operational efficiency and business diversity helped it overcome economic uncertainty.

See also: Jabil Circuit Falls on Mixed Earnings and Guidance

Looking ahead to the current quarter, so far analysts expect to see sequential and year-over-year growth of both per-share earnings and revenues. That EPS estimate also has inched up a penny in the past 60 days.

The Company

St. Petersburg, Fla.-based Jabil Circuit provides electronic manufacturing services and solutions worldwide. Customers include companies in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, solar, storage and telecommunications industries. The company was founded in 1966 and it is now an S&P 500 component with a market cap of $5.6 billion.

Competitors include Flextronics International (NASDAQ: FLEX), Sanmina-SCI (NASDAQ: SANM) and Benchmark Electronics (NYSE: BHE). Flextronics missed EPS estimates in the most recent quarter but topped sales expectations. Sanmina-SCI fell short on both the top and bottom lines, while Benchmark offered positive surprises for the most recent quarter.

See also: Collins Stewart Reiterates Buy, $9 Target on Flextronics

During the three months that ended in February, Jabil Circuit held its annual shareholder meeting and the board declared a quarterly dividend. The company also acquired Telmar Network Technology, and it boosted its chief executive's compensation package by 5% to reflect the company's financial performance during fiscal 2011.

Performance

Jabil Circuit has a long-term earnings per share growth forecast of 12.5% and a return on equity of 21.6%. Sales increased 10.0% over the past five years. The P/E and PEG ratios are in line with the industry averages, and the operating margin is a little higher than the industry average. Short interest is 4.2% of the float. Analysts on average recommend buying the stock. Their mean price target on the shares currently is about 5% higher than the current share price.

Shares are trading almost 37% higher than at the beginning of the year and are near the 52-week high. The price has been above the 50-day and 200-day moving averages since the beginning of the year. Over the past six months, the stock has outperformed the competitors mentioned above, as well as the broader markets.

See also: Garmin, Jabil Circuit and Other Top Tech Stocks in February