FN

Stock Analysis based on Fundamentals:

Company Overview:

• Established in the year 2000, the company was founded by Tom Mitchell, who serves as Chairman and was also a co-founder of Seagate Technologies.
• Operates in expanding sectors like Telecom, Automotive, Industrial Lasers, and Medical, positioning itself for revenue growth and market expansion.
• Specializes in manufacturing intricate components and modules, aiming to enhance profitability and reduce market competition
• The company’s market capitalization is $6.25 billion

7 reasons to Invest in Fabrinet (FN):

1. Strong Return on Invested Capital (ROIC) at 14.56%, indicating efficient capital utilization.
2. Low Debt/Equity Ratio of 0.02 signals conservative financing.
3. Robust Current Ratio of 3.71 reflects strong short-term liquidity.
4. Substantial Cash Reserves of $740.59 million provide financial flexibility.
5. Total Debt amounting to $24.44 million contributes to overall stability.
6. The company operates in niche product manufacturing, where competition is limited due to the specialized nature of the products.
7. Additionally, the company demonstrated strong revenue and EPS (Earnings Per Share) growth.

Risk Factors:

• The company’s low gross margin of 12% raises concerns about profitability and competitiveness.
• The company is trading at a P/E ratio of 24. If it fails to beat its upcoming earnings, we will face a correction in the stock price.

Chart:

= The stock is currently trading 23% below its all-time highs.

= The stock is currently trading below its 200-day simple moving average (SMA). If it breaches this level, it could potentially reach the next support line. This may present an opportunity to buy the stock with a margin of safety

= The stock price has delivered returns of 80% over the past year.

Please note this is only an opinion and not financial advice.

To get regular updates on stocks, please join our Discord community.

Our Articles on Long-Term Stock Analysis My best read on trading is this Book