Does Jabil’s 88% Surge Signal Room for Growth After Recent Cloud Industry Momentum?

If you are considering what to do with Jabil stock, you are far from alone. The company has caught the attention of both growth seekers and value-oriented investors, thanks to its impressive performance and intriguing valuation story. Over the past year, Jabil’s stock price has skyrocketed by 88%, making it one of the standouts in its sector. Zoom out further, and the picture looks even better. The total return for shareholders over the last three and five years has been 231% and over 500%, respectively. In just the past three months, Jabil has jumped by nearly 24%, signaling that the market sees real momentum or changing sentiment around its future prospects.

What is driving these moves? Recent market developments have heightened expectations for companies like Jabil that are exposed to both tech innovation and global manufacturing trends. With annual revenue and net income on an upward trajectory, there is a sense that Jabil has both the scale and adaptability to benefit from evolving industry needs. That said, the stock has not been without its pullbacks. Short-term dips can happen whenever investors start to wonder if the rally has overshot reality.

This brings us to the big question: how is Jabil valued today? Several popular methods of valuation suggest a mixed story, with Jabil being undervalued in 2 out of 6 major checks. This gives it a value score of 2. To really understand what is behind that number, let’s walk through each approach to valuation. As you will see, there could be an even better lens to evaluate the stock coming up later in the article.

Jabil delivered 88.2% returns over the last year. See how this stacks up to the rest of the Electronic industry.

Approach 1: Jabil Cash Flows

The Discounted Cash Flow (DCF) model is designed to estimate a company’s true worth by projecting its future free cash flows and discounting them back to today’s value. This approach helps investors gauge what the business might actually be worth, beyond day-to-day price swings.

For Jabil, the latest twelve months’ Free Cash Flow stands at $851.2 million. Analysts predict healthy growth ahead, with annual free cash flow expected to reach $2.2 billion by 2035. Projections for 2027 alone put Free Cash Flow at $1.45 billion, which demonstrates meaningful expansion over the coming decade.

Based on these projections, the DCF model calculates Jabil’s intrinsic value per share to be approximately $279. Compared to the current stock price, this suggests the shares are 26.9% undervalued. In other words, the market may be overlooking the company’s future cash-generating potential.

Result: UNDERVALUED

Our DCF analysis suggests Jabil is undervalued by 26.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Jabil Price vs Earnings

The Price-to-Earnings (PE) ratio is widely regarded as a reliable valuation metric for profitable companies like Jabil. It measures how much investors are willing to pay today for a dollar of current earnings, making it especially useful for mature businesses with established earnings streams.

It is important to remember that expectations for future growth and risk play a major role in determining what a “normal” or “fair” PE ratio should be. High-growth or lower-risk companies often command higher PE multiples, while those with slower growth or higher uncertainty may see lower ones.

Currently, Jabil trades at a PE ratio of 38x. This is meaningfully higher than the average for its peers (29x) and the broader electronic industry average of 23x. For further context, Simply Wall St’s proprietary “Fair Ratio” for Jabil is 33x, taking into account factors like earnings growth, profit margins, size, and market risks. Since Jabil’s current PE is 5x above its Fair Ratio, the stock now appears moderately overvalued by this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Jabil Narrative

Beyond ratios and models, successful investors increasingly use Narratives. These are your personal stories and perspectives about a company, connecting what you know about its business outlook to specific financial forecasts and fair value estimates.

A Narrative makes it easy to translate your beliefs about Jabil’s strategy, risks, and opportunities into numbers like future revenue, earnings, and margins, and see how those drive a fair value for the stock.

On Simply Wall St, Narratives are designed to be accessible whether you are a beginner or a seasoned investor, allowing you to build, update, and compare your views with a community of millions.

With Narratives, you can see at a glance if your fair value for Jabil is above or below today’s market price, making buy or sell decisions much more straightforward. Narratives automatically update when new data or news is released, so you always have the most current perspective on your side.

For example, one investor’s Narrative might see Jabil’s fair value at $256 thanks to bullish assumptions on AI and global expansion, while another’s more cautious outlook puts fair value at just $176. This demonstrates how your unique perspective can power smarter, more confident investment decisions.

Do you think there's more to the story for Jabil? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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