) reported fiscal first quarter results last week that included an
earnings surprise of nearly 18%., As a result, the Zacks Consensus
Estimate for the current fiscal year has improved in the past 7
days. In addition, Fabrinet's PEG looks attractive given its
earnings growth, making this Zacks #1 Rank (Strong Buy) a true
value stock. FN is a provider of optical packaging and precision
optical, electro mechanical and electronic manufacturing.
On November 5, Fabrinet reported fiscal first quarter earnings of
33 cents per share, breezing past the Zacks Consensus Estimate by
Net revenue declined 14.9% year over year to $158.6 million, due
primarily to reduced customer demand for Fabrinet's optical
communications manufacturing services during fiscal 2012. In
addition, the temporary suspension of production in some of
Fabrinet's facilities also led to the decline of the top line.
The Zacks Consensus Estimate for the fiscal year ending June 2013
has gained nearly 10% in the past 7 days to $1.33 per share, as the
1 estimate for the period was revised higher. For the fiscal year
ending June 2014, the Zacks Consensus Estimate has remained steady
Fabrinet has P/E and P/B multiples of 12.0 and 1.5, respectively.
It also has an attractive P/S of 0.8 (a P/E ratio under 15.0, a P/S
ratio less than 1.0 and a P/B ratio below 3.0 generally indicate
The return on equity (ROE) also looks attractive. It has a trailing
12-month ROE of 13.2%, compared with the peer group average of
8.8%. Fabrinet's PEG is attractive at 0.9, which indicates that the
stock is reasonably valued given the expected growth rate of 10.0%.
Based in George Town, the Cayman Islands and founded in 1999,
Fabrinet provides advanced optical packaging and precision optical,
electro-mechanical and electronic manufacturing services to
original equipment manufacturers (OEMs) of complex products such as
optical communication components, modules and sub-systems,
industrial lasers and sensors. Fabrinet also offers a broad range
of advanced optical and electro-mechanical capabilities across the
entire manufacturing process, including process design and
engineering, supply chain management, manufacturing, advanced
packaging, final assembly and test. Fabrinet has a market cap of
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