Jabil Inc (JBL, Financial) has recently experienced a daily loss of 2.38%, contributing to a 3-month decline of 17.68%. Despite these fluctuations, the company boasts a robust Earnings Per Share (EPS) of 11.65. This analysis seeks to determine whether Jabil (JBL) is significantly overvalued, as suggested by the GF Value, which currently stands at $75.43, markedly below its current trading price of $114.86.
Company Introduction
Jabil Inc is a powerhouse in the manufacturing services sector, offering extensive electronics design, production, and product management services across various industries. The company's market capitalization is currently $13.90 billion, with annual sales reaching $32.10 billion. Jabil operates through two primary segments: Electronics Manufacturing Services (EMS) and Diversified Manufacturing Services (DMS), with EMS being the major revenue driver. This financial and operational overview sets the stage for a detailed valuation analysis.
Understanding the GF Value
The GF Value is a proprietary measure designed to estimate the intrinsic value of a stock. It integrates historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and projected future business performance. According to this measure, Jabil (JBL, Financial) is currently significantly overvalued. This assessment suggests that the stock's future return may be lower compared to its business growth potential, primarily because its market price substantially exceeds our calculated GF Value.
Financial Strength and Risk
Investing in companies with solid financial strength reduces the risk of permanent capital loss. Jabil's cash-to-debt ratio stands at 0.79, which is relatively weak compared to industry peers. However, its overall financial strength has earned a GuruFocus rating of 7 out of 10, indicating a fair financial condition. Below is a visual representation of Jabil's debt and cash trends over recent years.
Profitability and Growth Prospects
Jabil has consistently demonstrated profitability, with a notable operating margin of 4.91%, ranking well within its industry. The company's 3-year average annual revenue growth rate is 13.3%, outperforming 77.02% of its industry counterparts. Such growth is a vital indicator of the company's potential to create shareholder value, particularly when it is profitably achieved.
ROIC vs. WACC: Value Creation Indicator
A critical measure of profitability is the comparison between Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC). Jabil's ROIC is an impressive 15.67, surpassing its WACC of 9.89. This indicates that the company is effectively creating value for its shareholders. The historical comparison of Jabil's ROIC and WACC is depicted below.
Conclusion
While Jabil (JBL, Financial) appears to be significantly overvalued based on its GF Value, the company's strong financial metrics and growth prospects suggest it maintains the potential to provide value to its investors. For those interested in a deeper exploration of Jabil's financial health and market performance, further details can be found in its 30-Year Financials.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
