Jabil Inc. (NYSE:JBL) presents a slight decrease in net revenue for Q1 2024 and the significant reason for this decline is softer demand. However, the company showed a year-over-year increase in core earnings per share. The company is set to announce Q2 2024 earnings in March with expectations of decrease in revenue and earnings per share. However, the diverse business model including healthcare, semiconductor equipment, and AI-driven data centers allows Jabil to remain prominent in the market. Moreover, the agreement with BYD Electronics boosts the company’s presence in electric vehicles and sustainable energy sectors. Therefore, despite the slight drop in quarterly revenue, the company expects strong growth in the long term. This article presents Jabil’s financial and technical performance using price action behaviour. It is evident that the stock price has formed a strong foundation based on the historical price patterns and broke the bullish pennant last week.
Financial Outlook for Jabil
The net revenue declined to $8.387 billion in Q1 2024 earnings, as compared to the net revenue of $9.6 billion in Q1 2023. The reason for the revenue drop was less demand at the end of the quarter. However, the revenue decline did not affect the company’s net income for Q1 2024. Jabil’s quarterly net income was $194 million compared to the $155 in Q4 2023 with a considerable profit margin of 2.31%. The company’s CEO, Kenny Wilson, also appreciated team efforts for growth in core margins and earnings per share despite less market demand. The chart below presents Jabil’s quarterly revenue. The data indicates a strong positive trend during the past quarters, which suggests a considerable profitability potential in 2024.
Jabil’s investment in a broad range of industries contributes to its success. This diverse business model has helped Jabil increase its earnings per share to reach $8.63 for FY 2023. Moreover, Jabil’s $2.2 billion agreement with BYD Electronic Company offers promising opportunities in electric vehicles and sustainable energy sectors. The company also expects stability in earnings per share in coming years. The chart below shows a steady growth in earnings per share, such as $9.006 for FY 2024, $10.66 for FY 2025, and $11.79 for FY 2026. Based on these strategic investments and approaches, Jabil is ready for sustained growth and continued innovation.
Jabil is expected to announce Q2 2024 earnings in March 2024 and expects a decline in revenue and earnings per share. The company aims to secure net revenue between $7.0 billion and $7.6 billion for Q2. GAAP operating income can vary between $216 million and $301 million during this period. The diluted earnings per share are projected to be $0.77 to $1.37. On the other hand, the company forecasts its core operating income between $339 million and $399 million. Meanwhile, the estimated core diluted earnings per share is expected in between $1.73 and $2.13. Jabil expects a net revenue of $31 billion in FY 2024, which is lower as compared to the net revenue of FY 2023. However, the earnings per share for FY 2024 are expected to be over $9.00. Despite the negative expectations for Q2 2024, the company’s strategic investment in electric vehicles and sustainable energy sectors suggests a long-term growth potential for the company.
Jabil stocks are trading at the P/E ratio of just 23.85 as per the chart below, despite the strong stock rally in the past few months. Since the earnings per share are expected to grow to $11.79 by FY 2026, assuming the P/E ratio of 23.85, the stock price might be trading at much higher levels in 2026.
Historical Price Patterns
Jabil’s technical analysis also presents positive market trends. As per the yearly chart below, the stock price hit bottom in 2020 at $17.25. Then, the trend reversed higher and hit a record high of $141.29 in 2023. This move represents a prominent increase of 719% in a relatively short period, which indicates intense price volatility. It is evident that 2020 finished at higher levels and resulted in the emergence of bullish hammer candlestick. This pattern indicates a strong reversal trend for Jabil and allow the market to remain in a bullish trend for a couple of years. The subsequent candles for 2021 and 2023 received a significant surge in the stock price. Following this strong trend, it is clear that the price will follow the same strong momentum and go higher in 2024.
The primary reason for a decline in the stock price of Jabil in 2020 was the global Covid-19 crisis, which resulted in disruptions of the supply chain, manufacturing delays and less market demand. All these factors negatively affected Jabil’s operations and financial performance. Nevertheless, the company was able to manage these challenges during these crises. The company made major adjustments to its operations by increasing the resilience of its supply chain. Similarly, the company diversified its manufacturing capabilities and focused on high-growth sectors including healthcare, automotive electronics and cloud computing for the recovery.
Implications of Parabolic Move
The strong positive trend is also evident in the monthly chart below, as it shows a parabolic move from the 2020 lows. Before the start of this parabolic move, the market was in consolidation from 2009 to 2019. But these consolidations remained within the uptrend, as marked by red trend lines. Although the price was in control within these trend lines, it was gradually going up, indicating that it was getting ready for a prominent increase in value. In 2020, Covid-19 resulted in a dramatic drop in the price, but it quickly recovered and broke the upper trend line.
After this breakout, the stock price corrected lower to the red trend line and got strong support at $48.52. This point proved a strong foundation for another sharp increase in the stock price.
The above chart also represents the inverted head and shoulders, with the head at $2.56 and the shoulders at $7.21 and $8.70, respectively. This chart pattern shows two of the best times in the history to buy Jabil stock. The first time was in 2020 when the price was $17.25. The second time was in 2022 when the price dropped to $48.52. These buying points are represented by the blue arrows in the monthly chart. Based on these buying points at the strong supports and parabolic patterns, the company’s future looks strong.
Furthermore, the appearance of the inside candle for January 2024 also indicates positive insights. It is possible that the Jabil’s stock price may reach a record level in 2024. Therefore, any correction in the market in the short term is regarded as the strong buying opportunity for investors.
Key Action for Investors
The bullish price patterns are also observed in the weekly chart below. It is important to note that the stock price is continuously increasing after hitting bottom in 2020. The price also formed an inverted head-and-shoulder pattern in 2022 with the head at $48.52 and shoulders at $52.05 and $55.01. The emergence of inverted head and shoulders within this bullish trend presents a strong foundation for the rally in 2024. Furthermore, the bullish pennant was also observed after the inverted head and shoulder, which indicates that the price is preparing for the strong rally. This bullish pennant was broken last week and the price is now trading near the record highs. A move above $141 will initiate the next strong rally. Based on the historical price development and strong price breakout, the likelihood of an upside breakout is high. Thus, investors can consider buying the stocks at current level and look for upside potential in 2024.
Jabil’s dependency on electric vehicles, healthcare, semiconductor equipment, and AI-driven cloud sectors provides diverse business opportunities. However, this diversification also presents risks. The consumer preference changes and new industry regulations can hurt Jabil’s financial performance. Moreover, new technologies also impact Jabil’s profitability. The bullish trend in the market after the Covid-19 pandemic presents growth and investor’s confidence. However, the intense rise in stock price by 719% from 2020 to 2023 increases the risks of price correction due to high volatility.
Jabil shows strength and growth, but geopolitical tensions, supply chain industry challenges, rising inflation and shifts in central bank policies can give the company a tough time. Additionally, Jabil’s BYD agreement indicates a growth potential, but it also presents the challenge to adapt the innovative industry. The company’s consistent growth and positive forecast for earnings per share highly depend on how Jabil continues with strategic plans and handles uncertainties in the market. Any delay in product development or failure to meet market demands can significantly affect financial performance.
In conclusion, Jabil’s financial performance for Q1 2024 shows the ability to effectively navigate through a volatile market environment despite experiencing a minor decrease in net revenue. Jabil’s significant agreement with BYD Electronics and its diversified portfolio shows sustainable growth and profitability in electric vehicles, healthcare and AI-driven cloud data centers. Jabil also expects a positive financial outlook for the coming years, with a significant increase in earnings per share that shows the company’s strong foundation and clear direction for its objectives.
The technical analysis of Jabil’s stock also clearly indicates a positive trend in the market. This positive outlook is due to the historical price movements and positive trends that highlight the confidence of investors. The quick price increment observed in 2020 and the emergence of bullish hammer candlestick suggest that the company can stand during the economic turbulence. The inside bar candlestick for January 2024 and the inverted head and shoulders pattern of 2022 also presents that the stock price is preparing for a strong rally in 2024. On the other hand, the breakout from the bullish pennant further strengthens the possibility of strong growth. A break above $141 can result in the price surge. Therefore, investors can consider buying the stock price at current levels to profit from the significant growth in 2024.
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