Fabrinet (FN) AI Stock Analysis

• Market Cap: $12.94B
• Dividend Yield: N/A
• Average Volume (3M): 831.46K
• Price to Earnings (P/E): 39.5
• Beta (1Y): 1.97
• Revenue Growth: 18.60%
• EPS Growth: 12.99%
• Country: US
• Employees: 14,213
• Sector: Technology
• Sector Strength: 86
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 2.65
• Shares Outstanding: 35,729,580
• 10 Day Avg. Volume: 796,033
• 30 Day Avg. Volume: 831,458
• 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: 0.75
• Enterprise Value/Revenue: 2.85
• Enterprise Value/Gross Profit: 23.56
• Enterprise Value/Ebitda: 23.83
• 1Y Price Target: $330.13
• Price Target Upside: -8.84% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 72 Outperform
• Price Target: $327.00 ▼(-9.71% Downside)

Fabrinet's strong financial performance and positive earnings call are key strengths, contributing to a solid overall score. However, technical indicators suggest potential bearish momentum, and the stock's valuation appears high, which tempers the overall score.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term financial health.

Telecom and DCI Growth

Significant growth in telecom and DCI segments highlights Fabrinet's competitive positioning in high-demand markets, ensuring future revenue streams.

Strong Balance Sheet

A strong balance sheet with minimal leverage enhances financial stability, providing flexibility for strategic investments and growth initiatives.

Negative Factors

Decline in Free Cash Flow

Declining free cash flow could impact Fabrinet's ability to fund operations and growth, necessitating careful cash management to maintain financial health.

Datacom Revenue Challenges

Challenges in the datacom segment due to supply constraints may affect short-term revenue, requiring strategic adjustments to mitigate impacts.

Automotive Revenue Decline

A decline in automotive revenue after rapid growth could signal market saturation or competitive pressures, impacting future revenue potential.

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 generates revenue primarily through the provision of manufacturing services and the sale of optical components. The company operates on a contract manufacturing model, where it partners with original equipment manufacturers (OEMs) and other technology companies to produce custom optical products according to their specifications. Key revenue streams include sales of laser modules, transceivers, and other optical components, as well as engineering and design services. Significant partnerships with major players in the telecommunications and data communications sectors contribute to Fabrinet's earnings, as these relationships often result in long-term contracts and repeat business. Additionally, the company's ability to scale production and maintain high-quality standards allows it to optimize operational efficiency, further enhancing its profitability.

Fabrinet Financial Statement Overview

Summary

Fabrinet exhibits strong financial health with consistent revenue growth and robust profitability metrics. The balance sheet is particularly strong, with minimal leverage and high equity levels, reducing financial risk. However, the decline in free cash flow growth warrants attention to ensure sustainable cash generation.

Income Statement

Fabrinet has demonstrated consistent revenue growth over the years, with a notable 4.79% increase in the latest period. The company maintains healthy profitability metrics, with a gross profit margin of 12.09% and a net profit margin of 9.72%. The EBIT and EBITDA margins are also strong at 10.39% and 11.95%, respectively, indicating efficient operational management. However, the slight decline in gross profit margin over the years suggests potential cost pressures.

Balance Sheet

The balance sheet is robust, characterized by a very low debt-to-equity ratio of 0.0028, indicating minimal leverage and financial risk. Return on equity is strong at 16.78%, reflecting effective use of shareholder funds. The equity ratio stands at 69.98%, showcasing a solid capital structure with a high proportion of equity financing.

Cash Flow

While operating cash flow remains strong, the free cash flow has decreased by 24.22% in the latest period, which could be a concern if the trend continues. The operating cash flow to net income ratio is 0.41, and the free cash flow to net income ratio is 0.63, indicating that the company is generating sufficient cash relative to its net income, though there is room for improvement in free cash flow generation.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.42B	3.42B	2.88B	2.65B	2.26B	1.88B
Gross Profit	413.35M	413.35M	356.12M	336.27M	278.59M	221.36M
EBITDA	408.61M	408.61M	360.50M	305.40M	246.14M	187.84M
Net Income	332.53M	332.53M	296.18M	247.91M	200.38M	148.34M
Balance Sheet
Total Assets	2.83B	2.83B	2.34B	1.98B	1.84B	1.62B
Cash, Cash Equivalents and Short-Term Investments	934.24M	934.24M	858.60M	550.47M	478.15M	547.93M
Total Debt	5.47M	5.47M	4.99M	13.42M	31.15M	45.96M
Total Liabilities	849.62M	849.62M	592.77M	510.99M	581.96M	503.60M
Stockholders Equity	1.98B	1.98B	1.75B	1.47B	1.25B	1.11B
Cash Flow
Free Cash Flow	206.78M	206.55M	365.62M	151.04M	33.66M	74.18M
Operating Cash Flow	328.37M	328.37M	413.15M	213.31M	124.25M	122.16M
Investing Cash Flow	-286.30M	-286.30M	-169.75M	-98.72M	-135.54M	-8.93M
Financing Cash Flow	-147.01M	-147.01M	-64.85M	-80.98M	-92.93M	-42.75M

Fabrinet Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 362.16
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FN, the sentiment is Positive. The current price of 362.16 is above the 20-day moving average (MA) of 332.87, above the 50-day MA of 320.16, and above the 200-day MA of 247.25, indicating a bullish trend. The MACD of 15.06 indicates Negative momentum. The RSI at 60.29 is Neutral, neither overbought nor oversold. The STOCH value of 82.78 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FN.

Fabrinet Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SANM	80 Outperform	$6.53B	26.25	11.58%	―	5.87%	20.66%
PLXS	77 Outperform	$3.80B	23.95	12.12%	―	2.31%	48.63%
MKSI	74 Outperform	$7.79B	28.11	11.12%	0.76%	4.47%	2887.37%
FN	72 Outperform	$12.94B	39.49	17.84%	―	18.60%	12.99%
JBL	67 Neutral	$23.00B	41.94	32.41%	0.15%	-6.13%	-53.35%
Sector *	61 Neutral	$36.70B	12.21	-10.39%	1.84%	8.50%	-7.32%
COHR	60 Neutral	$16.12B	―	0.63%	―	23.42%	71.17%

Fabrinet Corporate Events

Fabrinet Adopts New Executive Incentive Plan

On August 12, 2025, Fabrinet‘s Compensation Committee adopted an executive incentive plan for fiscal 2026, aiming to motivate executives by rewarding them based on financial performance metrics. The plan includes cash bonuses and equity awards, with specific targets for revenue and operating margins. Additionally, Fabrinet announced its financial results for the fourth quarter and fiscal year 2025, reporting record revenues and a 19% year-over-year increase. The company achieved $910 million in fourth-quarter revenue and $3.4 billion for the fiscal year, highlighting strong demand across its business sectors.