For investors looking to balance opportunity with care, the "Growth at a Reasonable Price" (GARP) method offers a sensible middle path. It seeks to find companies with good and lasting growth, but whose shares are not priced at the high levels common to popular momentum stocks. This method usually involves looking for firms with good basics, good profitability and financial condition, to confirm the growth is based on a steady base, not speculative excitement. One stock that recently appeared through such a careful screen is Jabil Inc (NYSE:JBL).
A Profile in Manufacturing Solutions
Jabil Inc is a worldwide manufacturing services company, providing full electronics design, production, and management services for different industries. Its work is divided into Regulated Industries (such as automotive and healthcare), Intelligent Infrastructure (centered on AI, cloud, and data centers), and Connected Living & Digital Commerce (including warehouse automation). This varied connection to long-term trends like digitalization, automation, and AI infrastructure is the central support of its growth story.
Evaluating Growth: Strong Past, Promising Future
The central idea of any GARP method is finding real growth, and Jabil’s fundamental report points to clear strength here. The company’s Growth score of 7 out of 10 is fueled by notable speed in earnings.
- Past Performance: In the last year, Jabil’s Earnings Per Share (EPS) rose by 35.07%, a notable number. This is part of a good multi-year pattern, with an average yearly EPS increase of 27.52%.
- Future Expectations: Analysts expect this positive path to keep going, with estimated average yearly increases of 17.69% for EPS and 8.97% for revenue in the next years. While future EPS increase is slower than the unusual past rate, the general view stays clearly positive and is a main reason the stock meets an "affordable growth" filter.
Assessing Valuation: Reasonable Within Context
A stock with good growth can still be a bad investment if bought at too high a cost. Jabil’s Valuation score of 5 indicates it is in a fair area, particularly when compared to its industry and growth picture.
- Peer Comparison: While Jabil’s Price-to-Earnings (P/E) ratio of 24.29 might seem high alone, it is noticeably less expensive than the wider industry average. The stock is priced at a lower P/E ratio than about 74% of similar companies in the Electronic Equipment, Instruments & Components field.
- Growth Compensation: Importantly, measures that include growth show a better view. The Price/Earnings-to-Growth (PEG) ratio, which changes the P/E for expected earnings increase, shows a fair price. Also, ratios based on cash flow and enterprise value (EV/EBITDA, Price/FCF) show Jabil is priced lower than most of its industry rivals.
The Supporting Fundamentals: Profitability and Health
For a GARP method, growth and price must be backed by solid business basics to reduce risk. Jabil’s report shows a varied but generally acceptable situation here.
- High Profitability: The company receives a very good Profitability score of 8. Important measures like Return on Equity (52.31%) and Return on Invested Capital (24.71%) are very high, doing better than over 99% and 100% of industry peers, in that order. This shows management is very good at making profits from the capital given to it.
- Adequate Financial Health: The Financial Health score of 5 indicates some points to watch next to positive areas. On the good side, Jabil builds shareholder value (ROIC is above its cost of capital) and has been lowering its share count. Its debt level compared to free cash flow is acceptable. However, liquidity measures like the Current and Quick ratios are under industry averages, suggesting a priority on efficient capital use over holding big cash reserves. This is a normal feature in some manufacturing models but is a point investors should be aware of.
Conclusion and Further Research
Jabil Inc shows an example of the "affordable growth" idea. The company shows strong earnings growth, both in history and in predictions, backed by very good profitability measures. Its price, while not a deep bargain, seems fair compared to its industry and its own growth outlook. The financial health score suggests investors should watch liquidity, but the good profitability and value-building profile give a balance.
This review is based on a fundamental report made from numerical data. You can see the complete, detailed fundamental analysis for Jabil Inc here.
For investors wanting to find other companies that match this careful method of seeking growth at a fair price, you can see more results using the Affordable Growth stock screener.
Disclaimer: This article is for information only and is not financial advice, a suggestion to buy or sell any security, or a support of any investment plan. Investors should do their own study and think about their personal money situation and risk comfort before making any investment choices.
