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 35th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 21%. As for the metrics that stood out in our discounted cash flow analysis of Fabrinet, consider:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 97. Notably, its equity weight is greater than 83.57% of US equities in the Technology sector yielding a positive free cash flow.
The business' balance sheet suggests that 3% of the company's capital is sourced from debt; this is greater than merely 9.46% of the free cash flow producing stocks we're observing.
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 57.59% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Technology that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as FN, try BELFA, EXFO, G, INTC, and MIME.