4. Jabil Inc. (NYSE:JBL)
Market Capitalization as of September 13: $12.01 billion
Number of Hedge Fund Holders: 51
Jabil Inc. (NYSE:JBL) is a global manufacturing company involved in the design, engineering, and manufacturing of electronic circuit board assemblies and systems, along with supply chain services, primarily serving original equipment manufacturers, and helping several industries bring their products to market efficiently and cost-effectively.
In FQ3 2024, the company repurchased 3.7 million of its shares for about $500 million, leaving approximately $700 million remaining from its $2.5 billion share repurchase authorization in late May.
The company’s revenue declined 20.18% year-over-year in the same quarter, and came to $6.77 billion. This was still higher than estimates by $235.38 million. DMS segment revenue was down approximately 23%, driven by the mobility divestiture. EMS revenue was down roughly 18%, driven by lower revenue in end markets like 5G, renewable energy and digital print, offset slightly by good growth in cloud.
The healthcare sector is experiencing softness in medical devices, which may impact short-term revenue. However, this decline is offset by strong performance in connected devices and AI data centers, with other markets meeting expectations. It plans to benefit from the world’s increasing demand for AI data center infrastructure, healthcare, pharma solutions, and automated warehousing.
Jabil Inc. (NYSE:JBL) is well-positioned for future growth, having successfully navigated a dynamic environment while achieving significant revenue milestones. The company remains focused on strategic investments, including a commitment to share repurchases, and is positioned to deliver value to shareholders while addressing evolving market demands.
Artisan Mid Cap Fund stated the following regarding Jabil Inc. (NYSE:JBL) in its fourth quarter 2023 investor letter:
“Along with DexCom, notable adds in the quarter included Quanta Services and Jabil Inc. (NYSE:JBL). Jabil provides outsourced manufacturing services to a diverse set of end markets and customers. For two decades, Jabil focused on manufacturing to customer-specified blueprints, which inherently carried low margins (2%–3%), a problem further exacerbated by Asian competition. However, in 2017, Jabil commenced a strategic pivot to focus on manufacturing high-growth, low-volume and high-value products in areas such as health care, industrial, automotive, cloud and 5G infrastructure. We believe moving away from more cyclical consumer electronics markets toward secular growth areas, such as EVs and medical devices, will lead to both faster growth and higher margins. Like other electronic components providers, Jabil saw slowing demand late in the year and lowered its fiscal 2024 outlook as a result. However, consistent with our thesis that Jabil has shifted its business mix toward more profitable, higher growth end markets, the company’s earnings and cash flow outlook remains relatively strong despite the cyclical pressures. Furthermore, the company sold its smartphone manufacturing business late in the quarter, which removes a low-growth, low-margin legacy exposure, further shifting its business mix in the right direction. We used the stock’s underperformance to increase our GardenSM position ahead of what we expect to be a compelling profit cycle once the current macro headwinds abate.”
