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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. Strong Q2 Earnings Exceed Expectations

The company delivered an impressive second quarter, with revenue reaching a new record of $1.13 billion, representing a 36% year-over-year growth, and non-GAAP EPS of $3.36 per share, exceeding the guidance range. Revenue growth was driven by multiple large strategic programs across the business, including a 29% year-over-year growth in optical communications and a 59% increase in telecom revenue.

Publication Date: Feb -06

📋 Highlights

Segment Performance

The telecom segment was a key contributor to the growth, with revenue increasing 59% from last year and 17% from Q1, driven by growth in DCI modules, including 400 ZR and 800 ZR modules. The datacom segment also showed momentum, with revenue growing 11% from Q1. High-performance computing (HPC) products revenue was $86 million in the quarter, and is expected to continue growing rapidly, with revenue expected to be north of $150 million when fully ramped.

Growth Prospects

The company is confident that the growth drivers that contributed to the success in Q2 will extend into Q3, with expected revenue growth in telecom, datacom, and HPC. The company is also seeing growth in co-packaged optics and optical circuit switching, and is optimistic about the potential for growth in these areas. As Seamus Grady, Chairman and CEO, mentioned, "We are a little more than halfway to the full ramp of our high-performance computing business, with revenue expected to be north of $150 million when it is fully ramped."

Valuation

With a P/E Ratio of 42.37 and an EV/EBITDA of 35.5, the company's valuation is relatively high, indicating that the market has already priced in significant growth expectations. However, with an estimated revenue growth of 17.7% next year and a ROIC of 15.86%, the company's prospects appear promising. The actual EPS of $3.36 beat estimates of $3.26, demonstrating the company's ability to deliver strong financial performance.

Outlook

The company expects total revenue to be in the range of $1.15 billion and $1.2 billion in Q3, representing approximately 35% year-over-year growth at the midpoint. Non-GAAP EPS is expected to be in the range of $3.45 to $3.60, representing approximately 40% year-over-year growth at the midpoint. With a strong demand profile and a solid balance sheet, the company is well-positioned to continue its growth trajectory.

3. NewsRoom

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Fabrinet to Webcast Investor and Analyst Q&A Sessions at the 2026 Optical Fiber Communication Conference

10:15

Source: globenewswire.com

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Fabrinet $FN Shares Sold by Dimensional Fund Advisors LP

08:38

Source: defenseworld.net

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Why Is Fabrinet (FN) Up 23.3% Since Last Earnings Report?

Mar -04

Source: zacks.com

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FN Jumps 25% in a Month: Is There More Room for the Stock to Grow?

Mar -04

Source: zacks.com

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Better ETF: iShares' Small-Cap IWO vs. Vanguard's Large-Cap VOO

Mar -02

Source:

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Fabrinet Eyes 800ZR and Co-Packaged Optics as Growth Catalysts

Mar -02

Source: zacks.com

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FN Benefits From Strong AI Optics Growth in 2026: More Upside Ahead?

Mar -02

Source: zacks.com

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Artisan Partners Limited Partnership Cuts Stock Position in Fabrinet $FN

Feb -28

Source: defenseworld.net

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: 5.4/10

Value: 3.1

Growth: 6.3

Quality: 6.8

Yield: 0.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

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Sanmina

A-Score: 4.9/10

Value: 4.2

Growth: 6.2

Quality: 5.7

Yield: 0.0

Momentum: 10.0

Volatility: 3.0

1-Year Total Return ->

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Fabrinet

A-Score: 4.8/10

Value: 0.9

Growth: 8.7

Quality: 6.6

Yield: 0.0

Momentum: 10.0

Volatility: 2.7

1-Year Total Return ->

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Vontier

A-Score: 4.6/10

Value: 5.5

Growth: 3.7

Quality: 6.4

Yield: 0.0

Momentum: 5.0

Volatility: 7.3

1-Year Total Return ->

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Badger Meter

A-Score: 4.5/10

Value: 1.2

Growth: 8.0

Quality: 7.2

Yield: 1.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

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Plexus

A-Score: 4.2/10

Value: 4.0

Growth: 6.2

Quality: 5.5

Yield: 0.0

Momentum: 3.5

Volatility: 6.0

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

543.02$

Current Price

543.02$

Potential

-0.00%

Expected Cash-Flows