Jabil Inc.

Over the longer term, global trends such as cloud IT spending outpacing on-premises, expansion in outsourced health care manufacturing, electrification of cars, demand for networking products and smart homes will offer opportunities for sustainable GDP-like growth for Jabil. The stable outlook reflects our expectation that Jabil will deliver low- to mid-single-digit-percent revenue growth, stable EBITDA margins, and reported free cash flow of $600 million-$700 million over the next two years. Over the next two years, we could raise the rating if Jabil delivers stable operating performance and maintains leverage below 2x and free cash flow (FCF) to debt above 25% while managing its shareholder return and acquisition objectives. Although unlikely over the next two years, we could lower our ratings

...We expect Jabil will deliver solid top-line growth this year, tapering to the low- to mid-single-digit percentages over the next two years. Jabil manufactures a diversified portfolio of products in distinct end markets, which benefited from the fast recovery from the COVID-19 pandemic. The world has adapted to a comprehensive digital workspace through the pandemic, which in turn increased demand for cloud infrastructure and created revenue opportunities for Jabil. 5G rollouts are continuing, where the company sees more opportunity in providing engineering content. Exposure to faster-growing markets such as health care and packaging also increased by the mid-teen percentages compared to the previous year. Still, softness in industrial and energy, and networking and storage, which currently represent roughly 30% of revenue, would moderate growth in the near term. Over the longer term, global trends such as cloud IT spending outpacing on-premises, expansion in outsourced health care manufacturing,...

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