Jabil Circuit Earnings, Solid But Atypical

Jabil Circuit JBL recently reported its Q4 results and management was mainly focused on the bottom line. J.P. Morgan said the results were atypical as operating margin exceeded the forecast and the high end of guidance despite revenue falling below forecast and below prior midpoint guidance. Jabil is realigning its segment disclosure, which is seen as bad and good. On the bad side the eight prior revenue categories are being consolidated down to five. On the good side, Jabil will continue reporting operating margin in three segments, but the new segments—High Velocity Systems, Enterprise & Infrastructure, and Diversified Manufacturing Services—now encompass Jabil's low-, medium-, and high-margin businesses, respectively, making mix shifts more evident. Despite posting a dramatic turnaround in revenue growth and proftability during fiscal 2010, and what is seen as potential for continued above-peer top-line growth and margins longer term. Jabil Circuit has an Overweight rating with an $18 price target JBL closed Tuesday at $13.76