A month has gone by since the last earnings report for Jabil (JBL). Shares have lost about 17.4% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Jabil due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
JBL Q3 Earnings Beat Estimates on AI Infrastructure Strength
Jabil third-quarter fiscal 2026 results surpassed expectations, driven by robust AI infrastructure demand and broad-based growth across its portfolio. Core earnings of $3.16 per share increased 23.9% year over year and topped the Zacks Consensus Estimate of $3.12 by 1.28%.
Net revenues rose 11.8% to $8.75 billion and exceeded the consensus mark of $8.63 billion by 1.39%. Intelligent Infrastructure remained the key growth engine, with segment revenues climbing 21% year over year.
Earnings and Revenue Top Expectations
Jabil reported third-quarter fiscal 2026 net revenues of $8.75 billion, up from $7.83 billion in the year-ago quarter. Revenues benefited from strong demand across multiple end markets, particularly AI-related cloud and data center infrastructure programs.
Core operating income increased to $504 million from $420 million a year ago. Core diluted earnings per share rose to $3.16 from $2.55, reflecting solid operating execution and margin expansion. On a GAAP basis, diluted earnings per share improved to $2.59 from $2.03.
Intelligent Infrastructure Leads Growth
The Intelligent Infrastructure segment remained Jabil’s largest business, contributing 48% of total revenue during the quarter. Segment revenue increased 21% year over year to approximately $4.2 billion, supported by strong demand in capital equipment, cloud and data center infrastructure, as well as networking and communications.
Management noted that networking and communications revenue increased more than 50%, aided by a strong networking ramp in India. Segment core operating margin expanded 80 basis points year over year to 6.1%, highlighting favorable mix and execution.
Other Segments Deliver Steady Results
Regulated Industries generated revenues of roughly $3.2 billion, representing 36% of total company sales. Revenues increased 4% year over year, driven primarily by stronger-than-expected automotive and transportation demand. Core operating margin improved 10 basis points to 5.6%.
Connected Living and Digital Commerce accounted for 16% of revenue. Sales rose 5% year over year to approximately $1.4 billion as consumer-related demand performed better than management’s cautious expectations. The segment delivered a core operating margin of 4.9%.
Margins and Cash Flow Improve
Jabil’s profitability strengthened during the quarter. Core operating margin expanded to 5.8% from 5.4% in the prior-year period, supported by a favorable business mix and disciplined execution across operations. GAAP operating income increased to $445 million from $403 million a year earlier.
Cash generation also remained healthy. Net cash provided by operating activities totaled $535 million, while adjusted free cash flow reached $359 million after capital expenditures of $176 million. During the quarter, the company repurchased approximately $291 million of shares under its existing authorization.
AI Momentum Drives Outlook Higher
Management highlighted continued strength in AI infrastructure programs as a major growth catalyst. Jabil now expects AI-related revenue of approximately $13.6 billion in fiscal 2026, up from its prior forecast of $13.1 billion and significantly above the $9 billion generated in fiscal 2025. The company also secured a third hyperscale customer during the quarter, further strengthening its long-term growth prospects.
According to management, growth is being supported by capabilities across compute, storage, networking, optics, power, cooling and rack-level integration, while maintaining an asset-light operating model.
Fiscal 2026 Guidance Raised
Encouraged by strong third-quarter execution and healthy demand trends, Jabil raised its fiscal 2026 outlook. The company now expects fiscal 2026 revenues of approximately $35 billion, core operating margin of about 5.8%, core diluted earnings per share of roughly $12.70 and adjusted free cash flow exceeding $1.4 billion.
For the fourth quarter of fiscal 2026, management projects revenues between $9.2 billion and $10 billion and core diluted earnings per share of $3.80-$4.20. The outlook reflects continued momentum in Intelligent Infrastructure, particularly AI-related programs, as well as improving trends in automotive and other end markets.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 9.34% due to these changes.
VGM Scores
At this time, Jabil has a average Growth Score of C, a score with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Jabil has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Jabil, Inc. (JBL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).