Jabil Inc.JBLNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $1,015.98 per share(market-calibrated)

+299.6%

Upside to Fair Value

Current

$254.26

Pure Model

$1,064.07

Fair Value

$1,015.98

Bull Case

$1,365.83

Bear Case

$803.06

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

0.50%

Calibrated Growth

2.61%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $1,064.07.

What's Driving This Ratingfor JBL

✓

CapEx already efficient

CapEx at 3.24% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 5.26% — below the sector mature average of 25.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $10.3B (20.86% margin).

→

Moderate revenue growth

Analyst consensus projects 8.92% revenue growth, fading to 3.75% by Year 10. Revenue reaches $49.3B (vs $29.8B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $710.99/share (19.1x terminal FCF) while exit multiple gives $1,417.15/share (44.5x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 325bps below the model's 3.75%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 62.86% indicates efficient cash generation. FCF reaches $7.3B by Year 10 (14.84% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.18

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.82%

Cost of Debt

Pre-tax Cost of Debt5.37%

Tax Rate26.35%

After-tax Cost of Debt3.96%

Equity Weight (E/V)89.21%

Debt Weight (D/V)10.79%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (89.21% × 9.82%) + (10.79% × 3.96%)

= 9.19%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$32.5B	$37.4B	$41.0B	$44.1B	$49.3B
EBIT	$1.7B	$2.0B	$5.1B	$7.5B	$10.3B
Tax	$450M	$519M	$1.3B	$2.0B	$2.7B
NOPAT	$1.3B	$1.4B	$3.7B	$5.5B	$7.6B
+ Depreciation	$892M	$1.0B	$1.1B	$1.2B	$1.4B
- Capex	$1.1B	$1.2B	$1.3B	$1.4B	$1.6B
- Δ NWC	$26M	$25M	$14M	$15M	$17M
Free Cash Flow	$1.1B	$1.2B	$3.5B	$5.3B	$7.3B
Discount Factor	0.916	0.768	0.644	0.540	0.415
Present Value	$983M	$954M	$2.3B	$2.8B	$3.0B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$7.3B

Terminal Growth Rate3.75%

WACC9.19%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$139.4B

PV of Terminal Value$57.9B

Exit Multiple Method

Year 10 EBITDA$11.6B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$325.7B

PV of Terminal Value$135.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$21.4B

PV of Terminal Value$57.9B

Enterprise Value$79.3B

(-) Net Debt$1.4B

Equity Value$77.9B

Shares Outstanding110M

Price per Share$710.99

Exit Multiple Method

PV of Projected FCFs$21.4B

PV of Terminal Value$135.2B

Enterprise Value$156.6B

(-) Net Debt$1.4B

Equity Value$155.2B

Shares Outstanding110M

Price per Share$1,417.15

Pure Model Fair Value

$1,064.07

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
7.19%	$1,336.51	$1,387.58	$1,453.48	$1,541.80	$1,666.30
8.19%	$1,158.52	$1,189.10	$1,226.56	$1,273.53	$1,334.15
9.19%	$1,020.89	$1,040.66	$1,064.07	$1,092.22	$1,126.71
10.19%	$909.36	$922.85	$938.45	$956.66	$978.23
11.19%	$816.17	$825.76	$836.64	$849.08	$863.45

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$803.06

215.8% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.48

Base Case

$1,064.07

318.5% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.18

Bull Case

$1,365.83

437.2% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 1.01

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth8.92%

Year 3 Revenue Growth7.43%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin5.26%

Terminal EBIT Margin25.00%

Tax Rate26.35%

Historical Capex / Rev3.24%

NWC / Revenue0.97%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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