Fabrinet (FN) AI Stock Analysis

• Market Cap: $8.22B
• Dividend Yield: N/A
• Average Volume (3M): 879.70K
• Price to Earnings (P/E): 25.6
• Beta (1Y): 2.06
• Revenue Growth: 17.14%
• EPS Growth: 18.90%
• Country: US
• Employees: 14,213
• Sector: Technology
• Sector Strength: 77
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 2.52
• Shares Outstanding: 35,830,654
• 10 Day Avg. Volume: 887,617
• 30 Day Avg. Volume: 879,704
• PEG Ratio: 69.72
• Price to Book (P/B): 3.97
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 27.57
• 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: $254.17
• Price Target Upside: 11.59% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

Fabrinet scores strongly in financial performance and earnings call analysis, driven by robust revenue growth and strategic partnerships. While technical indicators are generally positive, potential overvaluation and sector-specific challenges, such as declining Datacom revenue and temporary margin pressures, moderate the overall score.

Positive Factors

Management confidence and expansion

Management's confidence in future growth is highlighted by the expansion of their building capacity.

New contracts and programs

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

Telecom segment growth

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

Negative Factors

Datacom segment performance

Datacom disappointed again (-18% y/y) likely due to NVDA share loss at 800G to aggressive industry pricing.

NVDA attach rates risk

Some risk is acknowledged around NVDA attach rates.

Product launch delays

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 demonstrates robust financial health with strong revenue and profit margins, low leverage, and effective cash flow management. Minor concerns include the recent increase in capital expenditures affecting free cash flow growth.

Income Statement

Fabrinet exhibits strong revenue growth with a TTM (Trailing-Twelve-Months) total revenue increase from previous years. Gross profit margin and net profit margin have remained robust, demonstrating effective cost control and profitability. The EBIT and EBITDA margins are healthy, indicating solid operational efficiency.

Balance Sheet

The company maintains a low debt-to-equity ratio, suggesting prudent financial leverage and strong equity position. Return on equity is impressive, reflecting efficient use of shareholders' funds to generate profit. The equity ratio is solid, indicating a stable capital structure with a significant portion of assets financed by equity.

Cash Flow

Operating cash flow is strong relative to net income, indicating good cash conversion. However, the free cash flow growth rate is negative, reflecting higher capital expenditures. The free cash flow to net income ratio remains positive, showing the company can generate cash beyond its net income.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
3.26B	2.88B	2.65B	2.26B	1.88B	1.64B
	Gross Profit
397.42M	356.12M	336.27M	278.59M	221.36M	186.10M
	EBIT
311.77M	277.61M	251.70M	204.52M	150.75M	117.40M
	EBITDA
326.13M	360.71M	304.81M	243.39M	187.05M	152.12M
	Net Income Common Stockholders
326.39M	296.18M	247.91M	200.38M	148.34M	113.48M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
950.68M	858.60M	550.47M	478.15M	547.93M	488.12M
	Total Assets
2.62B	2.34B	1.98B	1.84B	1.62B	1.38B
	Total Debt
5.72M	4.99M	13.42M	31.24M	45.96M	59.52M
	Net Debt
-301.18M	-404.98M	-217.94M	-166.76M	-257.01M	-165.91M
	Total Liabilities
712.11M	592.77M	510.99M	581.96M	503.60M	406.98M
	Stockholders Equity
1.91B	1.75B	1.47B	1.25B	1.11B	974.41M
Cash Flow		Free Cash Flow
272.84M	364.73M	151.04M	33.66M	74.18M	107.15M
	Operating Cash Flow
356.33M	413.15M	213.31M	124.25M	118.67M	150.66M
	Investing Cash Flow
-304.26M	-169.75M	-98.72M	-135.54M	-5.44M	-71.25M
	Financing Cash Flow
-131.45M	-64.85M	-80.98M	-92.93M	-42.75M	-35.30M

Fabrinet Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 227.77
• 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 227.77 is above the 20-day moving average (MA) of 210.23, above the 50-day MA of 204.03, and above the 200-day MA of 224.47, indicating a bullish trend. The MACD of 7.76 indicates Negative momentum. The RSI at 60.97 is Neutral, neither overbought nor oversold. The STOCH value of 83.64 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
FN	80 Outperform	$8.22B	25.59	18.30%	―	17.14%	18.90%
SANM	79 Outperform	$4.52B	19.57	11.03%	―	-1.50%	1.84%
PLXS	75 Outperform	$3.60B	25.85	10.93%	―	-0.69%	42.26%
ITRI	74 Outperform	$5.23B	20.94	17.73%	―	7.10%	58.52%
MKSI	72 Outperform	$5.93B	27.02	9.50%	0.97%	-1.14%	―
COHR	68 Neutral	$12.22B	―	1.25%	―	21.68%	92.07%
Sector *	60 Neutral	$11.58B	10.33	-7.23%	2.94%	7.47%	-10.84%

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.