Fabrinet (FN, Financial) shares surged by 7.97% recently, marking a notable uptick spurred by Fox Advisors' initiation of coverage with an outperform rating. This rise significantly outpaced the broader S&P 500's modest gain.
Fabrinet, a key player in the electronics manufacturing services sector, is well-positioned within the optical communications market. The company’s shares are currently valued at $240.82, with a price-to-earnings (P/E) ratio of 26.94. This valuation reflects the market's positive outlook on the company’s future prospects, bolstered by anticipated growth in its optical equipment segment, which is expected to constitute 80% of sales by 2025.
Despite strong recent performance, the stock is considered "Significantly Overvalued" according to its GF Value. The stock’s GF Value stands at $184.48, signaling a potential risk for investors anticipating a correction. For more on the GF Value, visit GF Value.
Fabrinet's robust financial strength is highlighted by its impressive Altman Z-score of 10.35, indicating a low risk of bankruptcy. Its Piotroski F-score of 7 suggests a healthy financial status, aligning with the company's expanding operating margins.
Looking forward, analysts are optimistic about Fabrinet's earnings, projecting a rise in per-share earnings from $8.88 to $10.31 by 2025, and to $11.64 by 2026. Similarly, sales are expected to climb 17% this year to $3.39 billion and continue up to $3.83 billion by 2026, reflecting the company’s strong growth trajectory.
With a market capitalization of $8.67 billion and solid projected growth in both earnings and sales, Fabrinet (FN, Financial) remains an attractive proposition for investors, though caution is advised given its current overvaluation.
