Fabrinet (NYSE:FN) is scheduled to report Q1 earnings results after markets close for trading on November 2, 2020.
The company is expected to report earnings of $0.98/share on revenue of $421.7 million. The consensus earnings per share (EPS) of $0.98/share is based on a poll of 5 analysts and represents a growth in eps of 13.5% over the same quarter last year, when the company reported earnings of $0.86/share.
The revenue forecast of $421.7 million based on a poll of 5 analysts implies a year-over-year (YoY) growth in revenue of 5.6%. Last year the company reported $399.3 million in revenue for the quarter.
| Metric | Expected | Prior Year | YoY Change |
|---|---|---|---|
| Revenue | $421.66 | $399.30 | 5.6% |
| EPS | $0.98 | $0.86 | 13.5% |
Earnings Call Trends
Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.
What are your expectations from Fabrinet for earnings this quarter? Let us know in the comments!
| Quarter | Expected | Reported | Surprise | Result |
|---|---|---|---|---|
| Q4, 2020 | $0.87 | $0.96 | 10.4% | Beat |
| Q3, 2020 | $0.94 | $0.92 | −1.6% | Missed |
| Q2, 2020 | $0.93 | $1 | 7.7% | Beat |
| Q1, 2020 | $0.82 | $0.86 | 4.9% | Beat |
| Q4, 2019 | $0.94 | $1 | 6.8% | Beat |
| Q3, 2019 | $0.89 | $0.92 | 3.6% | Beat |
| Q2, 2019 | $0.92 | $0.97 | 5.4% | Beat |
| Q1, 2019 | $0.81 | $0.92 | 14.1% | Beat |
In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 26, 2020, the stock price did not react much to the update.
| Report Date | Price Day Prior | Price Next Day | Change % | Result |
|---|---|---|---|---|
| August 17, 2020 | $73.06 | $72.69 | −0.5% | Decline |
| May 4, 2020 | $59.64 | $58.02 | −2.7% | Decline |
| February 3, 2020 | $63.04 | $67.71 | 7.4% | Increase |
| November 4, 2019 | $58.45 | $57.56 | −1.5% | Decline |
The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.79, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.79 implies a 0.3% chance of earnings manipulation.
Fundamentals And Technical Analysis
Fabrinet is currently trading at $62.47/share, down −2.0% for the day. The company is trading at approximately 81.3% of its 52-week high of $76.85/share. The company’s stock price is down −14.1% since the last earnings report and down −2.1% over the previous week.
The company’s 14 Day Relative Price Index (RSI) of 49.95 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.
The current share price implies a price-to-earnings (P/E) multiple of 20.33 and a forward P/E multiple of 15.03.
Fabrinet’s current share price also implies a price-to-book (P/B) multiple of 2.37. The following table summarizes some other key fundamental ratios:
| Metric | Value |
|---|---|
| Last Reported Fiscal Period Key | FY2020.Q4 |
| Period End Date | June 26, 2020 |
| Stock Price (Current) | $62.47 |
| P/E Ratio | 20.3x |
| P/E Ratio (Fwd) | 15.0x |
| PEG Ratio | −3.0 |
| Total Debt / Total Capital | 2.7% |
| Levered Free Cash Flow | $108.3 million |
| EV / EBITDA | 12.4x |
Fabrinet is a mid-cap stock with a market capitalization of $2.308 billion and a total enterprise value of $1.884 billion. The company operates in the Information Technology sector and the Electronic Equipment, Instruments & Components industry.
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.
