Manufacturing Giant, Jabil Inc., Obliterates Wall Street Estimates (Biggest One-Day Gain Since 2020)

Jabil Inc. just reminded everyone that, while the world of manufacturing might be a flaming dumpster fire, it knows how to dance around the flames—and make some cash while doing it. 

(Source: Giphy) 

In short, the St. Petersburg-based company pulled out all the stops this quarter, beating earnings, announcing a restructuring plan, and topping it all off with a cool $1 billion stock buyback. Understandably, this had Wall Street so impressed, they sent the stock soaring north of +12% to clock in its biggest one-day gain since the pre-pandemic days of early 2020. How bout dat?

(Source: Market Watch) 

For instance, Jabil posted an impressive $2.30 per share for its fiscal fourth quarter, leaving analysts’ $2.22 estimate eating dust. Sure, revenue took a 17.7% nosedive to $6.96 billion (thanks to selling off its mobility biz last year), but that still managed to beat the $6.59 billion Wall Street was expecting. In other words, Jabil managed to shove Wall Street expectations where the sun don’t shine.

CEO Mike Dastoor didn’t shy away from boasting on the win either. In fact, even though he admitted the company saw “softness” (read: it wasn’t all sunshine and roses) in a few markets - Jabils bread and butter: AI data centers, helped them stay afloat. 

(Source: Medium) 

Whereas, Dastoor made it blatantly clear that Jabil is in prime position to cash in on long-term AI trends. Which given how much money is being thrown at AI in 2024… that should result in a major windfall for the company in the future. 

But, but, but… as if beating earnings wasn’t enough, Jabil also rolled out a restructuring plan aimed at something called “optimizing organizational effectiveness.” If that sounds like a sly way of saying we’re giving our workers the boot… Well, then you’d be correct. You see, “Optimizing organizational effectiveness” is literally just corporate speak for layoffs as head-count reductions across selling, administrative, and manufacturing are set to take place for the company to realign itself with the current economic landscape (a.k.a., dealing with inflation, supply chain chaos, and interest rate woes). 

(Source: Seeking Alpha) 

And while the restructuring is set to cost Jabil between $150 million and $200 million in charges this fiscal year, the company’s banking on these cuts to help smooth out some of the rough patches that have made life difficult for manufacturers lately.

(Source: Market Watch) 

On the other hand, what really got Wall Street throbbing with excitement was the fact that Jabil threw in a $1 billion stock buyback authorization for good measure. Why? Well because stock buybacks are basically Wall Street’s version of “treat yo self,” and Jabil is clearly feeling pretty good about their current stance in the market. So by reducing the number of shares floating around, Jabil’s sending a clear message: “We believe in our value, and we’re ready to reward shareholders.” (Sooo pump and dump then?) 

(Source: Giphy) 

What’s really interesting though, is that Jabil isn’t alone in this. Over the course of this year, plenty of bellwether manufacturers have been sounding the alarm on a tough demand landscape (looking at you, 3M and Emerson Electric), but with Jabil’s latest numbers - they’re definitely stealing the spotlight over their competitors going forward.

For this reason, Jabil also threw out a nice little guidance for the next quarter, forecasting earnings between $1.65 and $2.05 per share—right in line with analysts’ estimates. Good for them. Because, if we’ve learned anything over the past few months it’s that guidance is the final nail in the coffin between a massive sell-off or a blistering rally.

(Source: Yahoo Finance) 

And luckily for Jabils quants, they expect some growth going into 2025. The real question is though, while the stock has popped in the short term, will the restructuring and buyback be enough to keep Jabil thriving in a rocky economic environment? Only time will tell, but for now, investors are sitting nice and pretty after a thick, and veiny surge in Jabils share prices.

In the meantime, keep an eye on Jabil as we head into Friday's close - and as always, stay safe and stay frosty, friends! Until next time… 

P.S. Have you seen what the data is showing for current short positions on this weeks alert?! Simply put, we’re looking at over $3,000,000 sold SHORT! No one knows what will happen but if we see a short squeeze it could be one for the record books! Click here asap to get the details… 

Stocks.News does not hold positions in companies mentioned in the article.