What is driving Jabil Inc (NYSE: JBL) stock

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Jabil Inc (NYSE: JBL) stock rose over 3% on 25th September, 2019 (as of 10:22 am GMT-4; Source: Google finance). In the fourth quarter, the inventory levels had contracted sequentially with the days in inventory coming in at 58 days, which is a decline of six days quarter-over-quarter. JBL’s net capital expenditure for the fourth quarter was $165 million and for the full fiscal year it is slightly lower than expected at $787 million. The fourth quarter cash flows from operations were very strong, and stood at $1.1 billion. As a result of the strong fourth quarter performance and cash flow generation, the company’s adjusted free cash flow for the FY 19 came in stronger than expected at approximately $503 million. Core return on invested capital for Q4 was 21.3% and expanded by 210 basis points on a year-over-year basis to 21.4% for the full fiscal year. The company had exited the quarter with total debt to core EBITDA levels of approximately 1.5 times and cash balances of $1.2 billion.

JBL in the fourth quarter of FY 19 has reported the adjusted earnings per share of 88 cents, beating the analysts’ estimates for the adjusted earnings per share of 86 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 14 percent to $6.57 billion in the fourth quarter of FY 19, missing the analysts’ estimates for revenue of $6.61 billion.

Moreover, the revenue for the DMS segment rose 2% to $2.4 billion year-over-year was mainly due to another strong performance in the healthcare business. Core margins for the segment had improved 20 basis points year-over-year to 2.9%. Revenue for the EMS segment grew by 23% year-over-year to $4.1 billion, on the back of the 5G wireless, cloud, energy and automotive end markets.

For EMS segment, in FY 2019, revenue grew by 26% year-over-year to $15.4 billion driven by the value proposition that has been well received in the areas of 5G wireless, cloud, energy and retail infrastructure. Core margins for the segment declined 60 basis points year-over-year to 3.1%, mainly due to the ramp costs associated with the new business awards and softness in semi cap.

For the first quarter ending in December, Jabil expects its per-share earnings to range from 82 cents to $1.04. The company expects revenue to be in the range of $6.65 billion to $7.35 billion for the fiscal first quarter while the analysts surveyed by Zacks had expected revenue of $6.98 billion.

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