Value
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.5 |
| P/S | 6.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 3.2 |
| PEG | 9.2 |
| Analyst target | 6.0 |
- ▸Forward P/E: 33.8x
- ▸PEG: 0.63
FN · Why this verdict
Why Fabrinet (FN) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Exceptional 39% year-over-year revenue growth and three consecutive recent earnings beats are credible positives, but 76.6% product concentration in optical communications, negative free cash flow conversion, and momentum below the minimum threshold combine to make the current setup unattractive for new positions.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue has grown 39% year-over-year — the highest possible reading in the growth dimension — and three of the four most recent quarters have beaten consensus estimates, suggesting demand is accelerating and delivery is improving. Growth breakdown | Revenue growth stays above 20% year-over-year for 2 consecutive quarters, sustaining the above-average expansion rate. | →Stable |
| CounterWith 76.6% of revenue concentrated in optical communications, any demand slowdown in that single end-market could rapidly reverse the top-line trajectory; the concentration profile is itself a ceiling on how long high growth can be sustained. | ||
Optical communications represents 76.6% of revenue, and the company's own filings identify two high-severity and one medium-severity concentration exposures; geographic dependence on Thailand adds an additional layer of operational concentration risk. Risk breakdown | The optical communications share of total revenue declines below 65% over the next 12 months as other segments grow, demonstrating meaningful diversification progress. | →Stable |
| CounterDominant exposure to a fast-growing end-market can amplify gains during an upcycle; if optical communications demand remains robust, the concentrated positioning works in favor of earnings acceleration rather than against it. | ||
Free cash flow is negative despite positive reported net income, meaning the company is not yet converting its accounting profits into actual cash; this earnings quality concern coexists with the otherwise strong growth and beat track record. Quality breakdown | Free cash flow turns positive and the FCF-to-net-income ratio rises above 50% within four quarters, demonstrating that growth-phase investment is not permanently impairing cash generation. | →Stable |
| CounterNegative free cash flow during a rapid growth phase often reflects capital investment to support expansion rather than a structural impairment; if growth investment moderates, cash conversion may recover naturally without any deterioration in underlying operations. | ||
Price momentum at 4.2 sits below the 4.5 minimum level, and with only about 2.5% of headroom to the price target against significantly greater downside implied by the 0.36-to-1 reward-to-risk ratio, the setup does not support new positions. Engine gate (failed) | Momentum recovers above 5.5 and upside to the price target expands above 10% through a price pullback, restoring favorable reward-to-risk geometry. | →Stable |
| CounterVolume is accumulating (rising on-balance volume) and the stock remains above its 200-day moving average; the momentum shortfall may be temporary, and continued earnings beats could restore trend strength and prompt analyst target increases. | ||
Revenue has grown 39% year-over-year — the highest possible reading in the growth dimension — and three of the four most recent quarters have beaten consensus estimates, suggesting demand is accelerating and delivery is improving.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 20% year-over-year for 2 consecutive quarters, sustaining the above-average expansion rate.
CounterWith 76.6% of revenue concentrated in optical communications, any demand slowdown in that single end-market could rapidly reverse the top-line trajectory; the concentration profile is itself a ceiling on how long high growth can be sustained.
Optical communications represents 76.6% of revenue, and the company's own filings identify two high-severity and one medium-severity concentration exposures; geographic dependence on Thailand adds an additional layer of operational concentration risk.
→StableRisk breakdown
- Expectation
- The optical communications share of total revenue declines below 65% over the next 12 months as other segments grow, demonstrating meaningful diversification progress.
CounterDominant exposure to a fast-growing end-market can amplify gains during an upcycle; if optical communications demand remains robust, the concentrated positioning works in favor of earnings acceleration rather than against it.
Free cash flow is negative despite positive reported net income, meaning the company is not yet converting its accounting profits into actual cash; this earnings quality concern coexists with the otherwise strong growth and beat track record.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and the FCF-to-net-income ratio rises above 50% within four quarters, demonstrating that growth-phase investment is not permanently impairing cash generation.
CounterNegative free cash flow during a rapid growth phase often reflects capital investment to support expansion rather than a structural impairment; if growth investment moderates, cash conversion may recover naturally without any deterioration in underlying operations.
Price momentum at 4.2 sits below the 4.5 minimum level, and with only about 2.5% of headroom to the price target against significantly greater downside implied by the 0.36-to-1 reward-to-risk ratio, the setup does not support new positions.
→StableEngine gate (failed)
- Expectation
- Momentum recovers above 5.5 and upside to the price target expands above 10% through a price pullback, restoring favorable reward-to-risk geometry.
CounterVolume is accumulating (rising on-balance volume) and the stock remains above its 200-day moving average; the momentum shortfall may be temporary, and continued earnings beats could restore trend strength and prompt analyst target increases.
Per-dimension breakdown
Quality
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.7 |
| ROA | 5.7 |
| Gross margin | 0.0 |
| Op margin | 4.0 |
| Net margin | 5.0 |
| Current ratio | 8.6 |
| FCF quality | 0.0 |
| Moat | 6.9 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -19% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 39% YoY
Momentum
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 3.1 |
- ▸Oversold in uptrend (RSI 28)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 8.7 |
| erm sentiment | 5.5 |
- ▸Analyst upside: 32%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $1,779,775 (0.009% of mkt cap)
Peer rank
7.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.4 |
| quality rank | 7.3 |
| growth rank | 7.9 |
- ▸Conservative debt levels
Technical
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.9 |
| support resistance | 9.0 |
| 52w position | 5.2 |
| gap | 6.0 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.9 |
| days to cover | 8.7 |
| volatility | 0.0 |
| put call | 3.4 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 6.3 |
| debt equity | 9.2 |
- ▸High IV: 88%
- ▸Above max pain $195
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position.
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULTPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:54d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.2<4.5
- ASYMMETRY:1.0<1.5@spot
Warning (0)
none
Reward-to-Risk
0.98
Upside
+14.7%
Downside
15.0%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: INSIDER:OK. Top dim: Growth at 10.0; weakest: Momentum at 3.2. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Growth at 10.0, Peer rank at 7.0, and Technical at 7.0; the weakest are Momentum at 3.2, Risk (lower is worse) at 4.6, and Value at 4.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.98 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Revenue has grown 39% year-over-year — the highest possible reading in the growth dimension — and three of the four most recent quarters have beaten consensus estimates, suggesting demand is accelerating and delivery is improving.
Trip ifRevenue growth falls below 15% year-over-year for 2 consecutive quarters.
- P2Optical communications represents 76.6% of revenue, and the company's own filings identify two high-severity and one medium-severity concentration exposures; geographic dependence on Thailand adds an additional layer of operational concentration risk.
Trip ifOptical communications share of total revenue falls below 65% for 2 consecutive quarters, demonstrating the diversification progress that falsifies the concentration claim.
- P3Free cash flow is negative despite positive reported net income, meaning the company is not yet converting its accounting profits into actual cash; this earnings quality concern coexists with the otherwise strong growth and beat track record.
Trip ifFree cash flow turns positive and FCF-to-net-income ratio rises above 50% for 2 consecutive quarters.
- P4Price momentum at 4.2 sits below the 4.5 minimum level, and with only about 2.5% of headroom to the price target against significantly greater downside implied by the 0.36-to-1 reward-to-risk ratio, the setup does not support new positions.
Trip ifMomentum recovers above 5.5 and upside to the price target exceeds 10%, restoring a reward-to-risk ratio above 1.5-to-1.