Jabil Inc. : Investing to stay ahead

Published: 2025-07-10 01:48:22 ET JBL

Published on 07/10/2025 at 01:48

By Grégoire Legrand

Founded in 1966 and headquartered in St. Petersburg, Florida, Jabil is one of the world's largest manufacturing solutions providers with more than 140,000 employees across 100 locations in 30 countries. The group seems to make a major shift in global manufacturing - from AI infrastructure to next-gen medical devices and EV systems, leaning into high-value segments. Let's take a closer look.

The company operates through two primary business segments: Electronics Manufacturing Services (EMS) and Diversified Manufacturing Services (DMS).

The EMS segment focuses on manufacturing services for networking, telecommunications, computing, storage, and consumer electronics markets, serving customers in the 5G, wireless and cloud, digital print and retail, industrial and semi-capital equipment, and networking and storage industries.

The DMS segment provides engineers solution serving automotive & transportation, connected devices, and healthcare & packaging industries.

Total revenue fell by 17% YoY, from $34.7 billion to $28.9 billion, primarily due to the sale of its Mobility business, which had generated $4.2 billion in 2023. The most significant drop came from the Connected Living & Digital Commerce segment, down 30.2% from $10.6 billion to $7.4 billion, led by declines in Connected Living (–8%) and Mobility (–59.5%). Despite this, the segment’s core margin rose sharply from 5.0% to 6.2%.

Jabil’s Regulated Industries Revenue declined 5.4% YoY, falling from $13.0 billion in 2023 to $12.3 billion, mainly due to a 22.6% drop in Renewable Energy Infrastructure (from $3.1B to $2.4B). Auto & Transport remained flat at $4.4B, while Healthcare & Packaging saw a slight decline from $5.5B to $5.4B. Despite the revenue drop, the segment’s core margin improved from 5.0% to 5.3%.

Intelligent Infrastructure revenue declined more sharply, down 17.1% from $11.1 billion to $9.2 billion, driven by a steep 33.3% drop in Networking & Comms (from $4.5B to $3.0B) and declines in Capital Equipment (–15.8%) and Cloud & DCI (–4.2%). However, the segment's core margin increased slightly from 5.0% to 5.1%.

Looking ahead, Jabil is deploying capital into high-margin capabilities - clean-room fluidics, precision molding, and high-speed medical assembly for regulated sectors; photonics packaging, liquid-to-chip cooling, and advanced OSAT lines for AI data-center hardware; and autonomous-robotics integration plus CNC acoustics processing for Intelligent Infrastructure, and Connected Living & Digital Commerce.

EMS accounted for 47% of global electronics assembly in 2024, generating $627 billion in revenue. The market is expected to surpass $1.1 trillion by 2034, driven by growth in AI datacenter hardware, EV power systems, and industrial automation. While Asia still produces over 80% of EMS output, capacity is shifting toward India, Vietnam, and Mexico as part of “China + 1” strategies. The industry is moving toward more complex programs where speed, design input, and regulatory precision matter. Segments like medical devices, battery management, ADAS systems, and AI server backplanes are seeing faster growth than commodity electronics.

Source: Statista - Global Manufacturing of Computers & Electronics

Jabil benefits from a broad portfolio of clients across three industries. In Regulated Industries, Jabil serves leading names like Tesla, BMW, Medtronic, Johnson & Johnson, and Thermo Fisher, supporting complex products in automotive, healthcare, and life sciences. In Intelligent Infrastructure, Jabil partners with Amazon, Intel, NVIDIA, Ericsson, and NetApp, strengthening its presence in cloud, datacenter, and semiconductor equipment markets. In Connected Living & Digital Commerce, key clients include Apple, Samsung, Meta, Dyson, Whirlpool, and GoPro, reflecting strong exposure to premium consumer electronics, smart devices, and lifestyle brands.

However, it remains reliant on a few key customers, with its top five clients accounting for 36% of total revenue, and 88 clients making up 90% of overall sales. Apple remains Jabil’s largest customer but has gradually reduced its share of the company’s revenue - from 19% in 2022 to 11% in 2024.

Jabil operates over 100 manufacturing sites across Asia, Europe, and the Americas. Key Asian hubs include Shanghai, Penang, Shenzhen, Ho Chi Minh, and Pune, supporting high-volume production. In Europe, operations span from Wroclaw and Paris to Vienna and Dublin, while in the Americas, Jabil maintains a strong footprint in the U.S. with sites in St. Petersburg (HQ), Austin, Chicago, and San Jose, as well as in Mexico and Brazil.

Among its competitors, Foxconn leads, dominating high-volume consumer electronics, especially thanks to the iPhone. Flex and Wistron bring size but focus more on cloud, automotive, and healthcare. Celestica and Sanmina target complex, lower-volume sectors like aerospace and defense. Benchmark and Plexus carve out niches in medical and industrial electronics through strong design capabilities. Luxshare is the fast mover, expanding rapidly in EVs. Jabil positions itself in the middle - less scale than Foxconn but stronger in high-mix, agile manufacturing for data centers, healthcare, and industrial automation.

Among the key risks, Jabil remains exposed to cyclical demand, particularly in the consumer electronics and automotive sectors, which can drive revenue volatility. Despite its global footprint, the company is still reliant on a concentrated group of clients, making it vulnerable to spending cuts or supplier shifts from those customers. The business is also capital intensive, requiring ongoing investment in manufacturing infrastructure, though this is offset by a broad and diversified offering. Rising competition from lower-cost manufacturers, especially in Asia, adds pricing pressure, while geopolitical tensions and trade disruptions continue to pose operational and supply chain challenges.

As previously mentioned, Jabil’s revenue declined by 16.7% between 2023 and 2024, falling to $28.8 billion, but is projected to rebound to $32.5 billion by 2027. Over the same period, EBITDA dropped from $2.6 billion to $2.2 billion, with expectations to rise again to $2.8 billion in 2027. Meanwhile, net income surged by 70% to $1.3 billion in 2024 but is expected to drop by nearly 50% to $711 million in 2025, before recovering to $1 billion by 2027.

The company’s debt has fluctuated over the years, peaking at $1.39 billion in 2023, then decreasing to $679 million in 2024, and is forecast to increase by 43% to $973 million in 2025. CapEx declined for two consecutive years, reaching $784 million in 2024, with projections of $398 million in 2025 (–50%) and $550 million in 2026. Free cash flow hit $932 million in 2024 and is expected to climb to $1.39 billion by 2027.

Profitability is gradually improving: the EBITDA margin increased from 5.88% in 2020 to 7.91% in 2024, with forecasts pointing to 8.65% in 2027. ROA rose from 3.29% to 5.74%, and ROE jumped from 24.3% to 60% over the same period. By 2027, analysts expect ROA to reach 7.38% and ROE to hit 71.3%. The company’s leverage also improved, with Debt/EBITDA at 0.3x and Debt/FCF at 0.73x in 2024, compared to 0.83x and 5.16x, respectively, in 2020.

In terms of valuation, Jabil’s P/E ratio dropped sharply to 9.78x in 2024, well below its 10-year average of 30x. However, analysts expect a rebound to 35.2x in 2025 before settling at 22.8x by 2027. At the same time, EPS surged by 85.5% in 2024, reaching $11.17 compared to $6.02 in 2023, with projections of $9.80 by 2027.

From 2013 to 2024, Jabil returned $6.7 billion to shareholders, with the vast majority allocated to share repurchases. Over the same period, shares outstanding dropped from 203 million to 114 million, a 44% reduction at an average repurchase price of $47.

Jabil reported solid Q3 2025 with $7.8 billion in revenue, up 16 % YoY, producing GAAP operating income of $403 million and core EPS of $2.55. The surge came almost entirely from Intelligent Infrastructure, which jumped 51 % and now makes up 44 % of sales on robust cloud, AI-datacenter, and capital-equipment demand. Regulated Industries stayed steady at 39 % of revenue with a 5.5 % core margin, while Connected Living & Digital Commerce fell 7 % to 17 % of the mix.

The group seems well-positioned to benefits from AI investments, healthcare technology advancement and data center infrastructure growth. The group is focusing on higher-margin business segments and operational efficiency improvements as well as geographic diversification efforts, particularly in the Americas and Europe, aligning with customer reshoring strategies and geopolitical risk mitigation.

Grégoire Legrand