Fabrinet is a provider of advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of complex products, such as optical communication components, modules and subsystems, industrial lasers and sensors. The company was founded in 1999 and is based in George Town, the Cayman Islands.
FN Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Fabrinet with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Fabrinet ranked in the 40th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. The most interesting components of our discounted cash flow analysis for Fabrinet ended up being:
Interest coverage, a measure of earnings relative to interest payments, is 140.52; that's higher than 94.94% of US stocks in the Technology sector that have positive free cash flow.
The business' balance sheet reveals debt to be 2% of the company's capital (with equity being the remaining amount). Approximately only 10.74% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
FN's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 47.9% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
IT, CDW, AMAT, EVOL, and APPF can be thought of as valuation peers to FN, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
Fabrinet (NYSE:FN) is scheduled to announce Q4 earnings results on Monday, August 17th, after market close.The consensus EPS Estimate is $0.70 (-30.0% Y/Y) and the consensus Revenue Estimate is $386.86M (-4.5% Y/Y).Over the last 2 years, FN has beaten EPS estimates 75% of the time and has beaten revenue estimates...