Jabil (JBL)

Business Overview

Jabil is electronics manufacturing services at thin margins with fast capital turns. FY2025 (year to 31 August 2025) revenue was $29.8B. Gross margin was 8.9% and operating margin 4.0%. R&D was 0.1% of revenue. Stock-based compensation was 0.4%. Free cash flow (operating cash flow less gross capex) was $1.2B. Inventory was $4.7B.

Cash conversion cycle was 6 days (DIO 63, DSO 49, DPO 107) after the company sold about $1.3B of receivables ($927M + $372M) it would otherwise carry. The five largest customers were about 36% of revenue. Company-adjusted free cash flow was $1.3B (operating cash flow less net capex).

How the Numbers Read

An 8.9% gross margin and 4.0% operating margin look thin next to a brand or a networking company. The economics work only if capital turns fast. A six-day cash conversion cycle, helped by selling receivables, keeps invested capital small relative to revenue. Inventory of $4.7B is still large in dollars; the days maths is what keeps the cycle short.

Customer concentration at about 36% for the top five is the programme risk: a lost programme removes revenue that was largely pass-through. Stock pay at 0.4% barely moves free cash flow. The EMS economics guide is built around why a mid-single-digit operating margin can still earn on capital when the cash cycle stays short.

How the Model Values This Kind of Company

Contract manufacturing sets revenue as customer programme volume times a pass-through value per unit: the manufacturer is paid for building someone else's product. Gross margin is a single thin line. Working-capital days are the main capital claim; ROIC (NOPAT over net working capital plus net PP&E) is the screen that separates a 4% margin on fast-turning capital from a 30% margin on little.

Terminal value uses mid-cycle free cash flow, and stock pay is charged. Cycle amplitude often sits with the customers; the model can run without a product-cycle swing by default.

What to Watch in the Financials

Cash conversion cycle and receivables sold. 6 days after about $1.3B of receivables sold. Without factoring, DSO and CCC would be longer.

Gross and operating margin. 8.9% and 4.0%. Small moves in either direction matter because the base is thin.

Five largest customers. About 36% of revenue. Programme wins and losses at that group move the top line.

Inventory. $4.7B. Absolute stock risk remains even when days look short.

Key Risks

Programme concentration. About 36% of revenue in five customers means a single lost programme is material.

Working-capital dependence on receivables sales. The six-day CCC relies in part on selling about $1.3B of receivables; less factoring lengthens the cycle and raises invested capital.

Thin operating margin. At 4.0%, cost overruns or under-absorbed overhead flow quickly into losses on a programme.

Inventory absolute size. $4.7B of inventory is large even at 63 days if customer forecasts miss.