Jabil’s latest 10-K filing reveals a widening gap between reported earnings and actual cash generation. Revenue for the twelve months to Q4 2026 reached $35.95 billion, marking a 20.6% increase over the prior year. This growth rate accelerated by 2.8 percentage points compared to the rate seen a quarter earlier.

What stands out

Reported profit and cash are moving at different speeds. Net income rose 58.6% over the year, while free cash flow increased by only 17.2%. This divergence highlights that the company is converting a smaller portion of its earnings into liquid cash than it did previously.

Capital spending is outpacing cash generation from operations. Capital spending rose 34.2% over the period, which is faster than the 22.1% growth in operating cash flow. Consequently, less of the cash generated by the business was left over after reinvestment.

Growth and profit

Jabil is growing revenue faster than it is expanding its bottom line. The trailing gross margin stood at 9.2%, while the trailing operating margin was 4.7%. This operating margin represents an increase of 0.8 percentage points from a year earlier. The trailing net margin was 2.9%. Net income over the twelve months totaled $1.04 billion, reflecting the 58.6% year-over-year rise.

Cash flow

Operating cash flow generated $2.00 billion over the twelve months, up 22.1% from the previous year. Capital spending consumed $628.0 million, which equates to 1.7% of revenue. After deducting capital spending from operating cash flow, free cash flow stood at $1.37 billion. This figure represents a 17.2% increase on the year before. The free-cash-flow margin was 3.8% of revenue, down 0.1 percentage points from a year earlier.

The average diluted share count fell 3.6% over the year. This reduction in the share base contributes to the per-share metrics reported in the filings.

In context

Today’s free-cash-flow margin of 3.8% is higher than 92% of the company’s own past quarterly readings. Historical quarterly readings for this metric have ranged from −20.7% to 4.6%.

Today’s operating margin of 4.7% is higher than 94% of the company’s own past quarterly readings. The historical range for this metric spans from 1.2% to 7.0%.

Today’s twelve-month revenue growth rate of 20.6% is higher than 98% of the company’s own past quarterly readings. Past quarterly readings for this growth rate have ranged from −17.8% to 23.2%.

Guidance

The company provided its First Quarter of Fiscal Year 2027 guidance for Net revenue, setting a range of $10.6 billion to $11.4 billion. For U.S. GAAP operating income, the guidance range is $481.0 million to $541.0 million. The guided U.S. GAAP diluted earnings per share range is $2.78 to $3.18. For the full Fiscal Year 2027, the company guided Net revenue to $44.5 billion.

What it means for value

Our model shows that value is sensitive to changes in growth assumptions. If growth is 5 percentage points lower, the value decreases by 24.4%. If growth is 5 percentage points higher, the value increases by 31.2%. A free-cash-flow margin 1 percentage point lower would lower the value by 26.9%.

What to watch

The next filing will show whether the divergence between net income growth and free cash flow growth persists. It will reveal if capital spending continues to rise faster than operating cash flow. The report will also indicate if the operating margin expansion continues or reverses.