Analyzing Fabrinet’s fundamental ahead of earnings
Fabrinet (NYSE:FN) is an engineering and manufacturing services company. FN provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to equipment manufacturers of products, such as automotive components, medical devices, industrial lasers, and sensors. Fabrinet has facilities in Thailand, the United States of America, the People’s Republic of China, Israel, and the United Kingdom. This afternoon, FN was last seen down 0.7% at $92.50.
On Aug. 2, Fabrinet announced that its leadership team will be releasing its fourth quarter and full fiscal year of 2021 financial results after the close on Monday, August 16. FN will also hold a conference call that same day to review and discuss the presented results. In recent history, Fabrinet has outperformed earnings expectations on all four of their most recent earnings reports so the manufacturing company will be seeking another consecutive earnings beat no Monday.
For Q4 of fiscal 2020, Fabrinet beat analysts’ estimates by a margin of $0.09, reporting an EPS of $0.96. For Q1 of fiscal 2021, the manufacturing company's EPS increased to $1.05, beating expectations by a margin of $0.07. For Q2 of fiscal 2021, FN posted another increase in earnings, rising to $1.10 per share. The engineering company also beat estimates by a margin of $0.06. For Q3 of fiscal 2021, Fabrinet reported an EPS of $1.21 and beat expectations by a margin of $0.07.
Fabrinet stock has increased approximately 28% in price year-over-year and is up 52% since bottoming at a 52-week low of $58.85 last September. Additionally, shares of FN have grown 20% year-to-date. However, Fabrinet stock is down 4% since reaching an all-time high of $97.04 near the end of June.
Overall, Fabrinet stock is fundamentally solid, with consistent revenue and net income growth, as well as a strong balance sheet. In addition, Fabrinet has just $49 million in total debt, which is a big contrast to the $508.75 million the company holds in cash and cash equivalents. The biggest issue for Fabrinet stock lies in its valuation. However, at a not too high price-earnings ratio of 25.98, a solid case could be made for Fabrinet stock as a long-term investment.
An unwinding of pessimism among short-term options traders could send FN higher. The security sports a Schaeffer's put/call volume ratio (SOIR) of 1.62, which stands higher than 91% of readings from the past year. This means these traders have rarely been more put-biased.