Investment Thesis
Jabil faces deteriorating profitability with net income flat year-over-year despite 3.2% revenue growth, indicating severe margin compression in an already thin-margin contract manufacturing business. High leverage (2.55x debt/equity) combined with below-normal liquidity ratios (current ratio 0.98x) creates material financial risk that outweighs positive free cash flow generation.
Strengths
- Strong free cash flow generation ($887M) providing debt service capacity and strategic flexibility
- Established market position with $25.3B revenue base and positive YoY revenue growth
- Adequate interest coverage ratio of 5.1x enables debt servicing despite leverage
Risks
- Stagnant net income (0% YoY) with margin compression despite revenue growth signals operational deterioration
- Excessive leverage (2.55x debt/equity) for a low-margin business (2.5% net margin) creates vulnerability to revenue shocks
- Liquidity stress with current ratio 0.98x and quick ratio 0.66x below comfort levels; limited financial flexibility
Key Metrics to Watch
- Gross margin trend—any further decline signals competitive weakness and pricing pressure
- Net income growth rate—must turn positive to justify 2.55x leverage in low-margin sector
- Current ratio and cash position—deterioration would impair debt service capacity
Financial Metrics
Revenue
25.3B
Net Income
644.0M
EPS (Diluted)
$6.01
Free Cash Flow
887.0M
Total Assets
23.8B
Cash
1.4B
Profitability Ratios
Gross Margin
9.1%
Operating Margin
4.3%
Net Margin
2.5%
ROE
48.7%
ROA
2.7%
FCF Margin
3.5%
Balance Sheet & Liquidity
Current Ratio
0.98x
Quick Ratio
0.66x
Debt/Equity
2.55x
Debt/Assets
94.4%
Interest Coverage
5.10x
Long-term Debt
3.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-07-27T06:07:12.994936 |
Data as of: 2026-05-31 |
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