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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on FN

Fabrinet's recent performance was driven by strong Q4 2025 and Q1 2026 earnings, with revenue growth of 21% and 11% respectively. The company's diversification beyond optics, with momentum in EV and laser markets, is a major growth engine. Fabrinet's robust business model and global presence support its strong current and expected future growth. Analysts have upgraded the stock to a "Strong Buy" rating, citing growing optimism about its earnings prospects (Zacks Rank #1). The company's guidance for Q1 2026 was solid, with expected revenue growth.

1.c. Company Highlights

2. Fabrinet's Q1 FY2026 Earnings: A Strong Start to the Year

Fabrinet's financial performance in the first quarter of fiscal year 2026 was impressive, with revenue reaching $978 million, a 22% increase from the previous year and an 8% increase from the fourth quarter. Non-GAAP earnings per share were $2.92, exceeding guidance ranges and analysts' estimates of $2.83. The company's gross margin was 12.3%, down 30 basis points from the fourth quarter, but in line with expectations. Operating expenses were $16 million, or 1.7% of revenue, resulting in an operating margin of 10.6%, a 10 basis point decline from the fourth quarter.

Publication Date: Nov -08

📋 Highlights
  • Revenue Growth: First quarter revenue reached $978M, up 22% YoY and 8% QoQ.
  • Non-GAAP Earnings: Earnings per share hit $2.92, exceeding guidance ranges.
  • Telecom Revenue Record: Telecom revenue surged to $412M (+59% YoY) driven by data center interconnect (DCI) growth.
  • DCI Expansion: DCI revenue doubled to 14% of total revenue, reaching $136.7M (412M *14%).

Segment Performance

Optical communications revenue was $747 million, up 19% from the previous year and 8% from the fourth quarter, driven by telecom revenue, which reached a record $412 million, growing 59% from the previous year and 15% from the fourth quarter. Data center interconnect (DCI) revenue nearly doubled to 14% of company revenue. Non-optical communications revenue was $231 million, up 30% from the previous year and 5% from the fourth quarter, driven by high-performance computing (HPC) revenue of $15 million.

Guidance and Outlook

For the second quarter, Fabrinet expects revenue to be in the range of $1.05 billion to $1.1 billion, representing remarkable growth of 29% from the previous year at the midpoint. The company anticipates maintaining operating leverage, but some gains may be partially offset by foreign exchange headwinds. Earnings per diluted share are expected to be between $3.15 and $3.30. As Seamus Grady, Chairman and CEO, mentioned, "the HPC program is expected to scale considerably over the coming quarters and become a significant driver of the company's growth."

Valuation

With a P/E Ratio of 46.16 and an expected revenue growth rate of 27.3% next year, Fabrinet's valuation appears to be stretched. However, the company's return on invested capital (ROIC) is 15.16%, indicating a strong ability to generate returns on its investments. The EV/EBITDA ratio is 36.61, which is relatively high. Analysts should continue to monitor the company's progress in executing its growth strategy and maintaining its operating leverage.

3. NewsRoom

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Fabrinet (FN) Forms 'Hammer Chart Pattern': Time for Bottom Fishing?

Dec -04

Source: zacks.com

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Fabrinet to Present at Barclays 23rd Annual Global Technology Conference

Dec -03

Source: globenewswire.com

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JPMorgan Has 15 Ideas for 'Bargain Hunting' Tech Stock Investors

Nov -22

Source: investopedia.com

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Best Momentum Stocks to Buy for Nov. 11

Nov -11

Source: zacks.com

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Fabrinet: Weighing The Positives And Negatives

Nov -09

Source: seekingalpha.com

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Fabrinet (FN) Upgraded to Strong Buy: Here's What You Should Know

Nov -07

Source: zacks.com

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Are Computer and Technology Stocks Lagging Fabrinet (FN) This Year?

Nov -06

Source: zacks.com

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Fabrinet (FN) Q1 2026 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.48%)

6. Segments

Optical Communications

Expected Growth: 12.0%

Fabrinet's Optical Communications segment growth is driven by increasing demand for high-speed data transmission, fueled by 5G network deployments, data center interconnects, and cloud computing adoption. Additionally, the trend towards fiber-to-the-home (FTTH) and fiber-to-the-premises (FTTP) deployments, as well as the need for low-latency and high-bandwidth connectivity, contribute to the 12.0% growth.

Lasers, Sensors, and Other

Expected Growth: 14.0%

Fabrinet's 14.0% growth in Lasers, Sensors, and Other is driven by increasing demand for advanced laser technology in industrial and medical applications, growing adoption of sensors in IoT devices, and rising need for customized optical components in emerging industries such as autonomous vehicles and 5G infrastructure.

7. Detailed Products

Optical Communications

Fabrinet provides a range of optical communication products, including optical transceivers, optical engines, and optical components, used in data centers, metro networks, and long-haul networks.

Lasers

Fabrinet designs and manufactures a variety of laser products, including laser diodes, laser modules, and laser systems, used in industrial, medical, and scientific applications.

Optical Sensing

Fabrinet offers a range of optical sensing products, including optical sensors, optical switches, and optical interrogators, used in industrial, medical, and scientific applications.

Silicon Photonics

Fabrinet provides silicon photonics products, including silicon photonic chips, used in data centers, metro networks, and long-haul networks.

3D Sensing

Fabrinet offers 3D sensing products, including structured light, time-of-flight, and stereo vision, used in consumer electronics, automotive, and industrial applications.

8. Fabrinet's Porter Forces

Forces Ranking

Threat Of Substitutes

Fabrinet's products are highly customized, making it difficult for customers to find substitutes. However, the company's reliance on a few large customers increases the threat of substitutes.

Bargaining Power Of Customers

Fabrinet's customers are large and have significant bargaining power, which can lead to pressure on prices and margins.

Bargaining Power Of Suppliers

Fabrinet has a diversified supplier base, which reduces the bargaining power of individual suppliers.

Threat Of New Entrants

The capital-intensive nature of the industry and the need for specialized equipment and expertise make it difficult for new entrants to enter the market.

Intensity Of Rivalry

The industry is highly competitive, but Fabrinet's focus on high-volume manufacturing and its strong relationships with customers help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.91%
Debt Cost 9.13%
Equity Weight 99.09%
Equity Cost 9.13%
WACC 9.13%
Leverage 0.91%

11. Quality Control: Fabrinet passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Teledyne Technologies

A-Score: 5.7/10

Value: 2.8

Growth: 6.3

Quality: 6.9

Yield: 0.0

Momentum: 8.0

Volatility: 10.0

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Vontier

A-Score: 5.0/10

Value: 4.9

Growth: 3.8

Quality: 6.3

Yield: 0.0

Momentum: 7.5

Volatility: 7.3

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Sanmina

A-Score: 4.7/10

Value: 4.2

Growth: 5.0

Quality: 5.6

Yield: 0.0

Momentum: 9.5

Volatility: 4.0

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Fabrinet

A-Score: 4.7/10

Value: 0.9

Growth: 8.7

Quality: 6.4

Yield: 0.0

Momentum: 9.0

Volatility: 3.0

1-Year Total Return ->

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Badger Meter

A-Score: 4.5/10

Value: 1.4

Growth: 8.0

Quality: 7.6

Yield: 1.0

Momentum: 2.0

Volatility: 6.7

1-Year Total Return ->

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Plexus

A-Score: 4.4/10

Value: 3.6

Growth: 4.7

Quality: 5.6

Yield: 0.0

Momentum: 6.0

Volatility: 6.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

472.15$

Current Price

472.15$

Potential

-0.00%

Expected Cash-Flows