Fabrinet (FN): Assessing Valuation After a Strong Year-To-Date Rally

Fabrinet (FN) shares continued their steady climb this week as investors take a closer look at the company’s impressive year-to-date performance. The stock has nearly doubled over the past year, which is turning some heads.

See our latest analysis for Fabrinet.

It has been a standout period for Fabrinet, with strong momentum carrying the share price up by 4.5% in just the past day and an impressive 7.8% over the last week. That comes in addition to a year-to-date share price return of 104%, highlighting Fabrinet’s reputation as a growth bright spot. Looking further out, total shareholder returns have climbed over 98% in the last year and an eye-opening 548% over five years, reflecting sustained long-term gains as enthusiasm continues to build around the company’s performance.

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With shares on such a steep upward trajectory, investors are left wondering: is Fabrinet still undervalued, or is the current price already factoring in all of its future growth potential?

Most Popular Narrative: 6.3% Undervalued

Fabrinet’s last close of $449.06 stands at a modest 6.3% discount to the fair value estimate set by the most popular narrative, suggesting upside remains in the eyes of analysts following the company closely.

The ongoing surge in global data traffic and AI workloads is accelerating demand for high-speed optical components and data center interconnect (DCI) solutions. This is reflected in Fabrinet's record telecom revenue and rapid DCI growth (up 45% year-over-year), supporting the outlook for continued above-trend revenue growth.

Read the complete narrative.

Want to know what’s fueling this price target? It isn’t just hype. Discover how ambitious growth forecasts and bullish margin assumptions combine to create a valuation scenario you can’t afford to ignore. Dive in to see what sets this narrative apart from the rest.

Result: Fair Value of $479.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, supply chain disruptions or the loss of a major customer could quickly threaten Fabrinet's impressive growth and its future earnings prospects in the cloud sector.

Find out about the key risks to this Fabrinet narrative.

Another View: Multiples Tell a Different Story

While the fair value estimate offers an uplifting outlook for Fabrinet, the company looks pricey when comparing its price-to-earnings ratio against peers. At 45.8x, Fabrinet trades well above the US Electronic industry average of 24.6x and the peer average of 36.6x. Even the fair ratio of 39.2x indicates that investors are paying a clear premium, which raises questions about how much more upside is left if expectations stumble.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Fabrinet Narrative

If you’re looking to go beyond analyst opinions and crunch the numbers yourself, you can build your own perspective in just a few minutes. Do it your way

A great starting point for your Fabrinet research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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