Fabrinet (NYSE:FN) Announces Earnings Results

Fabrinet (NYSE:FN) released its quarterly earnings results on Monday. The technology company reported $4.34 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $4.21 by $0.13, FiscalAI reports. The firm had revenue of $1.47 billion for the quarter, compared to analyst estimates of $1.42 billion. Fabrinet had a return on equity of 22.81% and a net margin of 9.35%. The business’s revenue was up 50.7% on a year-over-year basis. During the same quarter last year, the company posted $2.92 earnings per share.

Here are the key takeaways from Fabrinet’s conference call:

• Record first-quarter results: Revenue rose 51% year over year to $1.474 billion, while non-GAAP EPS reached a record $4.34, both exceeding the company’s guidance.
• Data center demand remains the primary growth driver: Data center revenue increased 78% year over year to $777 million, with strength across interconnect, transceivers, and high-performance computing; communications infrastructure and automotive/industrial revenue also grew.
• Strong outlook and program pipeline: Fabrinet expects second-quarter revenue of $1.6 billion-$1.65 billion and non-GAAP EPS of $4.77-$4.92, supported by existing program growth and new ramps in merchant and hyperscale transceivers, optical circuit switching, multi-rail systems, NPO, and CPO.
• Capacity expansion is accelerating: Building 10 is nearing completion, a new Santa Clara site is already being leveraged, and Building 11 will add approximately 1.5 million square feet and about $3 billion in revenue capacity.
• Expansion is consuming substantial cash: First-quarter capital expenditures were $159 million, free cash flow was negative $137 million, and management expects additional spending for Building 11 and further capacity; tax expense may also remain volatile because Thailand’s Pillar Two offsetting credits have not yet been implemented.

Fabrinet Stock Performance

NYSE FN opened at $348.18 on Wednesday. Fabrinet has a twelve month low of $305.63 and a twelve month high of $748.89. The firm’s 50 day moving average price is $400.90 and its two-hundred day moving average price is $520.87. The stock has a market cap of $12.48 billion, a price-to-earnings ratio of 26.28 and a beta of 1.35.

Wall Street Analyst Weigh In

A number of analysts have commented on FN shares. Weiss Ratings downgraded Fabrinet from a “buy (b-)” rating to a “hold (c+)” rating in a research report on Wednesday, September 9th. Zacks Research upgraded Fabrinet from a “hold” rating to a “strong-buy” rating in a research note on Monday, October 5th. Wall Street Zen downgraded Fabrinet from a “buy” rating to a “hold” rating in a research report on Monday, July 20th. B. Riley Financial decreased their price objective on shares of Fabrinet from $431.00 to $385.00 and set a “neutral” rating for the company in a research note on Friday, October 30th. Finally, Rosenblatt Securities dropped their price objective on shares of Fabrinet from $750.00 to $600.00 and set a “buy” rating on the stock in a research note on Tuesday. One analyst has rated the stock with a Strong Buy rating, six have given a Buy rating and three have issued a Hold rating to the company’s stock. Based on data from MarketBeat.com, the stock has an average rating of “Moderate Buy” and an average target price of $579.25.

Insider Buying and Selling at Fabrinet

In other Fabrinet news, EVP Edward Archer sold 2,500 shares of the company’s stock in a transaction dated Thursday, September 3rd. The stock was sold at an average price of $385.91, for a total value of $964,775.00. Following the transaction, the executive vice president directly owned 7,007 shares of the company’s stock, valued at $2,704,071.37. This represents a 26.30% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available at this hyperlink. Company insiders own 0.22% of the company’s stock.

Trending Headlines about Fabrinet

Here are the key news stories impacting Fabrinet this week:

• Positive Sentiment: Fabrinet reported Q1 revenue of $1.47 billion, up 50.7% year over year and above estimates, while adjusted earnings of $4.34 per share also beat forecasts. Fabrinet Q1 results
• Positive Sentiment: Q2 guidance was well ahead of consensus: revenue of $1.6 billion–$1.7 billion and EPS of $4.77–$4.92. Strong data-center demand, including reported 78% growth in data-center revenue, is a key driver. Data-center demand and outlook
• Positive Sentiment: Investors also responded to the company’s manufacturing expansion plans and buyback news. Fabrinet is starting Building 11, which is expected to provide roughly $3 billion in capacity. Capacity expansion
• Neutral Sentiment: Analyst views were mixed but generally retained upside expectations: JPMorgan raised its target to $470 while keeping a neutral rating; Needham maintained a buy rating and $500 target, while Rosenblatt cut its target to $600 but kept a buy rating. JPMorgan rating update
• Negative Sentiment: Despite rapid sales growth, coverage highlighted questions about margins and cash demands. A new global minimum tax weighed on GAAP earnings growth relative to revenue, and expansion requires investment. Growth, taxes and cash costs

About Fabrinet

Fabrinet (NYSE: FN) is a provider of outsourced manufacturing services for complex optical, electronic and electromechanical products. The company works with original equipment manufacturers and other technology companies to design, manufacture, assemble, test and distribute products used in optical communications, industrial lasers, automotive applications, medical devices and other advanced technology markets.

Its capabilities include precision optical packaging, optical and electronic assembly, printed circuit board assembly, electromechanical manufacturing, engineering support, supply-chain management and testing.