By Rob Otman
Jabil (NYSE: JBL) is a $6 billion company today. Investors that bought shares one year ago are sitting on a 36.27% total return. That’s above the S&P 500’s return of 21.53%.
Jabil stock is beating the market, and it reports earnings soon. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Jabil reported a recent EPS growth rate of 30%. That’s below the electronic equipment industry average of 130.68%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the electronic equipment industry is 37. And Jabil’s ratio comes in at 16.97. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for Jabil stock is 87.74%. That’s above the electronic equipment industry average of 45.92%. That’s not a good sign. Jabil’s debt levels should be lower.
✓ Free Cash Flow per Share Growth: Jabil’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of Jabil comes in at 0.91% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Jabil’s profit margin is below the electronic equipment average of 10.16%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Jabil is 5.39%, and that’s below its industry average ROE of 14.14%.
Jabil stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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