Fabrinet (FN) AI Stock Analysis

• Market Cap: $6.78B
• Dividend Yield: N/A
• Average Volume (3M): 1.03M
• Price to Earnings (P/E): 21.2
• Beta (1Y): 2.01
• Revenue Growth: 14.83%
• EPS Growth: 28.84%
• Country: US
• Employees: 14,213
• Sector: Technology
• Sector Strength: 51
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 8.94
• Shares Outstanding: 35,830,260
• 10 Day Avg. Volume: 1,284,832
• 30 Day Avg. Volume: 1,028,862
• PEG Ratio: 0.73
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.54
• Price to Cash Flow (P/CF): 17.10
• P/FCF Ratio: 17.10
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $267.29
• Price Target Upside: 41.34% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

Fabrinet's overall stock score is supported by its strong financial performance, characterized by solid growth and profitability. However, technical analysis indicates mixed signals, and the valuation suggests potential limitations for stock price appreciation. Positive outcomes from the recent earnings call are partly offset by concerns related to the datacom segment and corporate events impacting short-term financial guidance.

Positive Factors

Contracts

The new Amazon contract is expected to have a material impact.

Financial Performance

FN results exceeded expectations with significant growth driven by the Telecom segment.

Market Guidance

Guidance is strong due to continued growth in the Telecom sector, supported by market share gains and product momentum.

Negative Factors

Product Launches

Second quarter guidance was impressive despite delays, supported by strong GPU demand.

Segment Performance

Datacom segment struggled with a decline in performance ahead of new product launches.

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 primarily through its manufacturing services, which include the assembly and packaging of complex optical and electromechanical components and systems. The company's revenue streams are largely derived from contracts with OEMs who require high-precision manufacturing for their products. Fabrinet provides value-added services such as design support, testing, and supply chain management, which enhance its revenue model. Significant partnerships with leading technology companies in various sectors, including telecommunications and medical devices, also contribute to its earnings. The company's ability to deliver high-quality, reliable manufacturing solutions at scale is a critical factor in its financial success.

Fabrinet Financial Statement Overview

Summary

Fabrinet exhibits strong financial health characterized by impressive growth rates, high profitability margins, and efficient cash flow management. The company's low leverage and high equity ratio further underscore its financial stability, making it well-positioned within the Hardware & Equipment industry.

Income Statement

Fabrinet demonstrates strong revenue growth with a notable increase from $2.64 billion to $3.12 billion TTM. The company maintains robust profitability, with a solid gross profit margin of 12.3% and a net profit margin of 10.4% TTM. EBIT and EBITDA margins are healthy at 9.6% and 11.7%, respectively. This consistent growth and profitability highlight the company's superior performance in its industry.

Balance Sheet

The balance sheet of Fabrinet reflects stability with a low debt-to-equity ratio of 0.003, indicating minimal leverage. The equity ratio stands strong at 72.5%, showcasing a solid capital structure. Return on Equity (ROE) is impressive at 17.7%, illustrating efficient use of shareholders' equity to generate profits.

Cash Flow

Fabrinet's cash flow management is exemplary, with operating cash flow surpassing net income, resulting in a healthy operating cash flow to net income ratio of 1.18. The company showcases a positive free cash flow growth rate and a free cash flow to net income ratio of 0.96, highlighting robust cash generation and efficient capital expenditure management.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
3.12B	2.88B	2.65B	2.26B	1.88B	1.64B
	Gross Profit
383.37M	356.12M	336.27M	278.59M	221.36M	186.10M
	EBIT
301.29M	277.61M	251.70M	204.52M	150.75M	117.40M
	EBITDA
394.67M	360.71M	304.81M	243.39M	187.05M	152.12M
	Net Income Common Stockholders
326.01M	296.18M	247.91M	200.38M	148.34M	113.48M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
90.04M	858.60M	550.47M	478.15M	547.93M	488.12M
	Total Assets
330.34M	2.34B	1.98B	1.84B	1.62B	1.38B
	Total Debt
21.00M	4.99M	13.42M	31.24M	45.96M	59.52M
	Net Debt
-69.04M	-404.98M	-217.94M	-166.76M	-257.01M	-165.91M
	Total Liabilities
135.98M	592.77M	510.99M	581.96M	503.60M	406.98M
	Stockholders Equity
194.36M	1.75B	1.47B	1.25B	1.11B	974.41M
Cash Flow		Free Cash Flow
314.20M	364.73M	151.04M	33.66M	74.18M	107.15M
	Operating Cash Flow
383.02M	413.15M	213.31M	124.25M	118.67M	150.66M
	Investing Cash Flow
-183.97M	-169.75M	-98.72M	-135.54M	-5.44M	-71.25M
	Financing Cash Flow
-129.45M	-64.85M	-80.98M	-92.93M	-42.75M	-35.30M

Fabrinet Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 189.11
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 189.11 is below the 20-day moving average (MA) of 202.21, below the 50-day MA of 207.10, and below the 200-day MA of 228.68, indicating a bearish trend. The MACD of -2.53 indicates Positive momentum. The RSI at 41.86 is Neutral, neither overbought nor oversold. The STOCH value of 12.56 is Positive, 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	78 Outperform	$6.78B	21.16	18.88%	―	14.83%	28.84%
ITRI	77 Outperform	$4.43B	19.49	17.70%	―	12.29%	147.67%
SANM	74 Outperform	$4.05B	18.57	10.55%	―	-8.92%	-12.11%
PLXS	73 Outperform	$3.23B	27.68	9.27%	―	-3.53%	-3.90%
MKSI	69 Neutral	$4.42B	23.32	7.93%	1.34%	-0.99%	―
Sector *	57 Neutral	$19.95B	9.66	-12.05%	2.76%	5.40%	-24.89%
COHR	53 Neutral	$8.59B	―	0.88%	―	14.61%	85.44%

Fabrinet Corporate Events

Fabrinet Revises Financial Guidance After Amazon Agreement

On March 12, 2025, Fabrinet entered into a Transaction Agreement with Amazon, issuing a warrant to Amazon’s affiliate to acquire up to 381,922 ordinary shares of Fabrinet, with vesting conditions tied to payments under a commercial agreement. This issuance is expected to lead to a non-cash stock-based accounting adjustment impacting Fabrinet’s third fiscal quarter revenue by approximately $4.2 million, and a reduction in net income per fully diluted share by $0.12, prompting a revision of its financial guidance for the quarter.