Apple is the dog that wags JBL’s tail.
This Florida-based maker of iPhone and iPad casings had a surprisingly good quarter, and its guidance beat analysts’ expectations. Excerpts from the notes I’ve seen.
Timothy Arcuri, Cowan: Implications To AAPL From JBL’s Results. AAPL was 24% of Jabil’s (JBL; not covered) FY16 sales and makes the casings for the iPhone and iPad as part of the company’s Green Point division (all within its DMS [Diverse Manufacturing Segment], AAPL ~60% of segment revs). The company reported FQ3 (May) revs/EPS ahead of Street ($4.49B/$0.31 vs. $4.40B/$0.29) on revenue upside within DMS driven by strength across mobility, healthcare and packaging, and JBL guided FQ4 (Aug) revs ~$100MM above Street (revs +9% Q/Q and +11% Y/Y) that we think is largely driven by expectations for mobility (i.e., iPhone).
Aaron Rakers, Stifel: Guide Imply Slightly Better Apple Trends? Looking forward, Jabil is guiding its August 2017 quarter DMS segment revenue to grow by 26% y/y, or implying approximately $2.05 billion revenue. This implies a low-20% q/q increase, which compares to +14%, +19%, and +12% q/q in the August 2014, 2015, and 2016 quarters, respectively. This positively compares to the company’s prior comments that DMS segment revenue in the August 2017 quarter would likely be similar to the ~$1.9 billion reported in the August 2015 quarter. According to Matthew Sheerin, Stifel Analyst covering Jabil (JBL, Hold – $30.63), the company’s DMS segment guide implies 35-40% q/q growth in sales for its top customer, Apple, for the August quarter; up 35% y/y and better than previously expected. We believe Jabil is reluctant to discuss trends into the November quarter given the uncertainties surrounding product launches.
Arcuri’s kicker: “While notable for traders, this just means more of the ‘powder keg’ pushes to CQ4 (we model 90MM iPhone units).”
Fun fact: Jabil Circuit, Inc., headquartered in St. Petersburgh, was founded in 1966 by two guys named James and Bill.
Below: A enlargeable version of the Stifel chart.