Fabrinet (FN) AI Stock Analysis

• Market Cap: $17.91B
• Dividend Yield: N/A
• Average Volume (3M): 728.35K
• Price to Earnings (P/E): 38.0
• Beta (1Y): 2.12
• Revenue Growth: 19.71%
• EPS Growth: 14.83%
• Country: US
• Employees: 14,213
• Sector: Technology
• Sector Strength: 88
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 3.36
• Shares Outstanding: 35,826,120
• 10 Day Avg. Volume: 624,420
• 30 Day Avg. Volume: 728,354
• PEG Ratio: 2.47
• Price to Book (P/B): 5.37
• Price to Sales (P/S): 3.11
• P/FCF Ratio: 51.55
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: 4.52
• Enterprise Value/Gross Profit: 37.64
• Enterprise Value/Ebitda: 38.43
• 1Y Price Target: $561.88
• Price Target Upside: 12.37% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9
• EPS Forecast (FY): 13.58
• Revenue Forecast (FY): $4.54B

• Rating: 79 Outperform
• Price Target: $575.00 ▲(15.00% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is driven by strong financial quality (growth, profitability, and an extremely low-leverage balance sheet) and a very upbeat earnings outlook with robust guidance. Technicals also support the thesis via a strong uptrend, though momentum looks somewhat stretched. The main constraint is valuation, with a high P/E and no dividend support, alongside cash-flow variability that bears monitoring.

Positive Factors

Balance Sheet Strength

Exceptionally low leverage and a large equity base provide durable financial flexibility: management can fund capital expansion, absorb working-capital swings, and support customer ramps without adding debt. That reduces refinancing risk and preserves strategic optionality over the next several quarters.

Sustained Revenue Momentum

Multi-year top-line growth reflects durable demand across optical communications and adjacent markets, showing scalable volume and customer traction. Consistent revenue expansion supports operating leverage, steadier margins, and the ability to amortize fixed costs as production scales over a 2-6 month horizon and beyond.

HPC Ramp & Capacity Buildout

Rapid HPC and non-optical growth plus announced facility expansion create a structural revenue diversification away from just datacom. Successfully scaling new lines can raise long-term revenue mix toward higher-complexity, higher-margin products and lock in multi-year manufacturer relationships as HPC demand secularly expands.

Negative Factors

Free Cash Flow Volatility

Material decline and volatility in free cash flow suggest working-capital swings and higher reinvestment needs tied to rapid growth and capacity adds. Even with strong profitability, weaker cash conversion can constrain discretionary capital, slow deleveraging or shareholder returns, and make funding cadence more sensitive over coming quarters.

Component Supply Risk (Datacom)

Dependency on scarce, leading-edge components creates a structural risk to throughput and timing of revenue ramps. Approving a second source mitigates but does not eliminate supply concentration; repeated constraints could delay customer qualifications, compress near-term growth, and impair margins until multi-sourcing is fully proven.

Persistent FX Headwinds

Ongoing foreign-exchange pressures can structurally erode reported margins and add forecasting uncertainty. Even with hedging programs, currency moves that persist over quarters will reduce operating leverage benefits, complicate pricing dynamics with global OEMs, and require active margin management to protect profitability.

Fabrinet Business Overview & Revenue Model

Company Description

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company offers a range of advanced optical and electro-mechanical capabilities in the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, advanced packaging, integration, final assembly, and testing. Its products include switching products, including reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths, speeds, and over various distances. The company's products also comprise tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as Infiniband, Ethernet, fiber channel, and optical backplane connectivity. In addition, it provides solid state, diode-pumped, gas, and fiber lasers used in semiconductor processing, biotechnology and medical device, metrology, and material processing industries; and differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. Further, the company designs and fabricates application-specific crystals, lenses, prisms, mirrors, laser components, and substrates; and other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. It serves original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices, and sensors. The company was incorporated in 1999 and is based in George Town, the Cayman Islands.

How the Company Makes Money

Fabrinet makes money by providing contract manufacturing services to OEM customers and recognizing revenue from the sale of manufactured products and assemblies it builds to customer specifications. Its core revenue stream is manufacturing and assembly work for complex optical and electro-mechanical products—typically including component manufacturing (where applicable), sub-assembly, final assembly, optical/electrical testing, and related production services—delivered at volume to customers in markets such as optical communications and industrial lasers. Economically, Fabrinet earns a manufacturing margin: it purchases raw materials and components (or manufactures certain parts), applies labor, process engineering, and test/quality systems to build finished modules/sub-systems, and sells the completed units to customers at contracted prices that embed value for its manufacturing expertise, yields, and scale. Revenue concentration and demand are driven by customer product cycles and end-market volumes (e.g., telecom/datacom infrastructure buildouts for optical communications and capital spending cycles for industrial laser systems). The company’s earnings are also influenced by factors typical to electronics/photonics manufacturing services, including production ramp execution, capacity utilization, product mix (higher-complexity builds generally carry different margin profiles), material sourcing costs and availability, quality/yield performance, and long-term customer relationships that can lead to repeat production programs. Specific partnership details beyond customer/OEM relationships are null.

Fabrinet Financial Statement Overview

Summary

Fundamentals are strong overall: solid revenue growth and ~10%+ operating profitability, plus an exceptionally conservative balance sheet with minimal debt. The main offset is cash-flow volatility, with a sharp recent decline in free cash flow and weaker cash conversion versus the prior year.

Income Statement

FN shows strong top-line momentum with revenue up 8.3% in TTM (Trailing-Twelve-Months) and a multi-year expansion from ~$1.88B (2021) to ~$3.89B (TTM). Profitability is solid and fairly consistent, with TTM operating margin ~10.5% and net margin ~9.7%. A key watch item is modest margin pressure versus 2023–2024 levels (gross and EBITDA margins have drifted down), suggesting a slightly less favorable mix or higher costs even as earnings remain strong.

Balance Sheet

The balance sheet is a clear strength: leverage is extremely low (TTM debt-to-equity ~0.003; total debt ~$4.9M against ~$2.18B equity). Equity and assets have grown meaningfully over time, supporting scale-up without relying on debt. Returns are attractive and stable, with return on equity ~17.9% in TTM (Trailing-Twelve-Months), indicating efficient capital use; the main limitation is not financial risk, but that returns will depend on sustaining operating performance rather than balance-sheet leverage.

Cash Flow

Cash generation is positive but more volatile. In TTM (Trailing-Twelve-Months), operating cash flow is ~$278M and free cash flow is ~$102M, but free cash flow fell sharply (about -49% growth) versus the prior annual period. Cash conversion is moderate, with free cash flow at ~58% of net income in TTM, down from stronger conversion in 2024 (free cash flow was ~88% of net income). The trend suggests higher reinvestment needs or working-capital swings, which bears monitoring even though profitability remains solid.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	3.89B	3.42B	2.88B	2.65B	2.26B	1.88B
Gross Profit	467.60M	413.35M	356.12M	336.27M	278.59M	221.36M
EBITDA	458.04M	408.61M	360.50M	305.40M	246.14M	187.84M
Net Income	374.09M	332.53M	296.18M	247.91M	200.38M	148.34M
Balance Sheet
Total Assets	3.27B	2.83B	2.34B	1.98B	1.84B	1.62B
Cash, Cash Equivalents and Short-Term Investments	960.77M	934.24M	858.60M	550.47M	478.15M	547.93M
Total Debt	8.08M	9.15M	8.63M	13.42M	31.15M	45.96M
Total Liabilities	1.08B	849.62M	592.77M	510.99M	581.96M	503.60M
Stockholders Equity	2.18B	1.98B	1.75B	1.47B	1.25B	1.11B
Cash Flow
Free Cash Flow	101.79M	206.55M	365.62M	151.04M	33.66M	74.18M
Operating Cash Flow	278.11M	328.37M	413.15M	213.31M	124.25M	122.16M
Investing Cash Flow	-276.34M	-286.30M	-169.75M	-98.72M	-135.54M	-8.93M
Financing Cash Flow	-86.30M	-147.01M	-64.85M	-80.98M	-92.93M	-42.75M

Fabrinet Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 500.02
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FN, the sentiment is Negative. The current price of 500.02 is below the 20-day moving average (MA) of 540.36, below the 50-day MA of 501.97, and above the 200-day MA of 399.48, indicating a neutral trend. The MACD of 1.40 indicates Positive momentum. The RSI at 46.23 is Neutral, neither overbought nor oversold. The STOCH value of 32.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FN.

Fabrinet Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FN	79 Outperform	$17.91B	38.01	18.39%	―	19.71%	14.83%
PLXS	74 Outperform	$5.24B	24.74	12.39%	―	1.82%	56.52%
COHR	69 Neutral	$46.08B	48.81	3.58%	―	20.80%	―
MKSI	69 Neutral	$15.39B	36.46	11.54%	0.54%	8.13%	780.20%
JBL	67 Neutral	$27.70B	38.47	51.13%	0.14%	13.18%	-38.37%
SANM	66 Neutral	$6.83B	42.40	9.86%	―	7.40%	13.79%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%