Jabil's (JBL) Diversification Makes It A Potential 2011 Winner - Barron's
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Price: $371.80 -0.32%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.1%
Revenue Growth %: +15.9%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.1%
Revenue Growth %: +15.9%
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Just when you think Jabil Circuit (NYSE: JBL) can't get any better...it will!
According to Barron's, some of the 45-year-old company's best days are ahead of it.
Jabil has traditionally been a manufacturer of printed circuit board since they began, currently doing business with such big caps as Nokia (NYSE: NOK), Research in Motion (Nasdaq: RIMM), and Cisco (Nasdaq: CSCO).
Having conquered the printed circuit process, Jabil decided to use their cash wisely, and completed a recent acquisition of Green Point Enterprises in 2006, which gave JBL the ability to manufacture plastic covers, battery packs, and integrated touch screens, among other offerings.
Barron's notes that their new offerings are used in "wind pitch controllers, solar panels and in the medical device repair and manufacturing industry, where it designs equipment including patient monitoring systems, X-Ray machines and relief bands for motion sickness."
Jabil, just like many tech companies, took advantage of their glory days during the tech boom of the late 90's and early 2000's. Instead of sitting on their cash, Jabil put it to use, aiming for diversification through plant openings and M&A.
And their sector is poised to grow again in 2011, according to one analyst from Collins Stewart. He sees the auto, aerospace, industrial, instrumentation, military, and medical (AAIIMM) sector expanding 20 - 30% throughout the year, compared to just 5% 10% for electronics manufacturing services.
RBC Capital is also liking the way that JBL diversified away from manufacturing, saying that they have stronger margins that others in the EMS business.
Though trading for a fair forward P/E of 8.8x, JBL showed some strength in their Q111 report, when they reported an EPS of $0.55 with revs of $4 billion, compared to the consensus EPS of $0.54 and $3.4 billion in revs.
Not everyone is so rosy on the shares, Citigroup downgraded the shares in November, citing potential problems brought to light by Cisco, expected to report in February. JBL draws 15% of revs from Cisco.
Concluding, the RBC analyst thinks that if JBL can execute, the stock could rise into the mid-$20's.
According to Barron's, some of the 45-year-old company's best days are ahead of it.
Jabil has traditionally been a manufacturer of printed circuit board since they began, currently doing business with such big caps as Nokia (NYSE: NOK), Research in Motion (Nasdaq: RIMM), and Cisco (Nasdaq: CSCO).
Having conquered the printed circuit process, Jabil decided to use their cash wisely, and completed a recent acquisition of Green Point Enterprises in 2006, which gave JBL the ability to manufacture plastic covers, battery packs, and integrated touch screens, among other offerings.
Barron's notes that their new offerings are used in "wind pitch controllers, solar panels and in the medical device repair and manufacturing industry, where it designs equipment including patient monitoring systems, X-Ray machines and relief bands for motion sickness."
Jabil, just like many tech companies, took advantage of their glory days during the tech boom of the late 90's and early 2000's. Instead of sitting on their cash, Jabil put it to use, aiming for diversification through plant openings and M&A.
And their sector is poised to grow again in 2011, according to one analyst from Collins Stewart. He sees the auto, aerospace, industrial, instrumentation, military, and medical (AAIIMM) sector expanding 20 - 30% throughout the year, compared to just 5% 10% for electronics manufacturing services.
RBC Capital is also liking the way that JBL diversified away from manufacturing, saying that they have stronger margins that others in the EMS business.
Though trading for a fair forward P/E of 8.8x, JBL showed some strength in their Q111 report, when they reported an EPS of $0.55 with revs of $4 billion, compared to the consensus EPS of $0.54 and $3.4 billion in revs.
Not everyone is so rosy on the shares, Citigroup downgraded the shares in November, citing potential problems brought to light by Cisco, expected to report in February. JBL draws 15% of revs from Cisco.
Concluding, the RBC analyst thinks that if JBL can execute, the stock could rise into the mid-$20's.
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