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Key Takeaways FN's Q4 FY25 non-optical revenues were up 41% YoY, driven by gains in automotive & industrial laser segments.FN's diversification includes medical and metrology, expanding exposure to less cyclical growth marketsZacks estimates FN's Q1 FY26 non-optical revenues to grow 29.8% YoY to $231M, reflecting continued momentum.Fabrinet's (FN) strategic push into manufacturing markets beyond optical communications is yielding substantial results, with the company's automotive and industrial laser segmen ...

Key Takeaways FN anticipates Q1 fiscal 2026 revenues of $910 million to $950 million, a 24% increase year over year.Shortages of 200-gigabit-per-lane lasers may limit datacom growth despite strong end-market demand.Earnings guidance of $2.75-$2.90 per share factors in margin headwinds.Fabrinet (FN) shares have appreciated 74.3% year to date (YTD), outpacing the Zacks Electronics – Miscellaneous Components industry’s advance of 38.9% and the Zacks Computer and Technology sector’s return of 19.8%. The surge h ...

Key Takeaways Fabrinet broke out DCI as a standalone metric in the fiscal fourth quarter 2025 for the first time.Fabrinet is benefiting from AI-fueled demand for high-bandwidth Data Center Interconnects.Fabrinet's DCI revenues were $107 million in the fourth quarter of fiscal 2025, 12% of total revenues.Fabrinet (FN) is ramping its exposure to Data Center Interconnect (DCI), a segment poised to gain prominence as hyperscalers scale infrastructure to meet accelerating AI and cloud workloads. DCI forms the op ...

Core Idea - The article emphasizes the investment philosophy of Thomas W. Phelps, particularly his book "100 to 1 in the Stock Market," which advocates for buying exceptional companies early, holding them with discipline, and allowing compounding to generate wealth [1][4][6]. Phelps's Investment Framework - Phelps's framework focuses on identifying companies with durable advantages, such as network effects, proprietary know-how, and advantageous cost structures [8]. - The importance of verifying a large addressable market that allows for long-term compounding without hitting a wall is highlighted [8]. - Present-tense profitability is essential; Phelps preferred companies that generate cash rather than speculative ventures [8]. - The article suggests buying companies when their narratives are still forming, favoring modest valuations over those priced for perfection [8]. - A strategy of doing less is recommended, as holding onto winning investments can lead to tax deferral and reduced errors [8]. Current Investment Candidates - The article lists 25 companies that fit Phelps's criteria, categorized by how they create competitive advantages rather than by index labels [9]. - Companies in the construction and infrastructure sector, such as EMCOR Group and Quanta Services, are noted for their execution capabilities and ability to convert backlog into cash [10][11]. - Precision manufacturers like Celestica and Fabrinet are recognized for their high returns on capital and asset-light models [12]. - In network infrastructure, Arista Networks and Super Micro Computer are highlighted for their strong positions in high-speed switching and AI hardware, respectively [13]. - Companies in the materials sector, such as Martin Marietta Materials, are noted for their pricing power and local monopolies [14]. - Engineering firms like WSP Global are recognized for their expertise and customer relationships in regulated markets [15]. - Consumer brands like e.l.f. Beauty and Academy Sports are mentioned for their market share growth and operational efficiency [16]. - Specialty finance companies like FirstCash and software firms like Agilysys are noted for their cash generation and growth potential [17]. - Internationally, utilities like Sabesp and fintechs like StoneCo are highlighted for their governance and profitability improvements [18]. - UK companies like Spectris and Halma are recognized for their consistent acquisition strategies and operational excellence [19]. Conclusion - The article concludes that the focus should be on finding real engines of growth and sizing investments appropriately to endure market volatility, allowing time to enhance value [22].

Core Insights - Fabrinet's position as a leading optical packaging specialist is increasingly strategic due to the industry's shift towards higher bandwidth requirements and advanced data center architectures [1] - The demand for optical packaging is expected to remain strong, driven by artificial intelligence workloads and cloud computing expansion [2] - The complexity of modern optical packaging is increasing as networks migrate to higher speeds, supporting premium revenue streams [3] - High-performance computing (HPC) is expected to further expand demand for advanced optical packaging, with Fabrinet recognizing its unique requirements [4] - Competition in the optical packaging market is intensifying, with rivals like Lumentum Holdings and Coherent Corp also targeting similar demand trends [5] - Fabrinet's share price has significantly outperformed industry averages, reflecting strong market performance [6] - The stock is currently trading at a forward Price/Sales ratio higher than the industry average, indicating a premium valuation [9] - The Zacks Consensus Estimate for Fabrinet's earnings indicates strong year-over-year growth expectations [11] Group 1 - Fabrinet's expertise in precision optical assembly and packaging technologies positions it at the center of infrastructure developments reshaping global connectivity [1] - Optical communications revenue reached $689 million in Q4 fiscal 2025, up 15% year over year, with telecom revenue climbing 46% to $412 million [2] - The sophistication of optical packaging supports premium revenue streams, with 800G and faster products generating $313 million in the quarter, up 21% from the prior year [3] Group 2 - The decision to classify HPC as a distinct revenue category reflects its unique requirements and growth potential [4] - Lumentum Holdings and Coherent Corp are also well positioned to benefit from the same drivers of AI workloads and cloud computing expansion [5] - Fabrinet's shares have jumped 64.7% YTD, outperforming the Zacks Electronics-Miscellaneous Components industry and the Zacks Computer and Technology sector [6] Group 3 - Fabrinet's stock is trading at a forward 12-month Price/Sales ratio of 3.05X compared to the industry's 2.08X [9] - The Zacks Consensus Estimate for Fabrinet's first quarter fiscal 2026 earnings is pegged at $2.83 per share, indicating 18.41% year-over-year growth [11]

Core Insights - Fabrinet (FN) and TE Connectivity (TEL) are key players in the electronics and industrial markets, with FN specializing in high-precision optical components and TEL in connectivity and sensor solutions [1][2] - Both companies are positioned to benefit from growth drivers such as artificial intelligence infrastructure, electric vehicles, and industrial automation, making them direct competitors in high-growth connectivity markets [2] Fabrinet (FN) Overview - Fabrinet is recognized for its contract manufacturing of high-end optical communications equipment, serving major clients like NVIDIA and Cisco [3] - In Q4 fiscal 2025, Fabrinet reported revenues of $910 million, a 21% increase year over year, with optical communications contributing $689 million, reflecting a 15% rise [3][4] - The company’s optical packaging capabilities are crucial for AI infrastructure, with data center interconnect revenue growing 45% year over year to $107 million [4] - The Zacks Consensus Estimate for optical communications revenues in Q1 fiscal 2026 is $699.92 million, an 11.8% increase year over year, with earnings projected at $2.83 per share, up 2.2% [4] Risks for Fabrinet (FN) - Fabrinet faces near-term challenges, including component supply constraints and margin pressure from new product launches [5] - The company has a high concentration risk, with NVIDIA accounting for 28% of fiscal 2025 revenues and the top 10 customers making up 86% [5] TE Connectivity (TEL) Overview - TE Connectivity is a diversified technology leader providing connectivity and sensor solutions across various markets, including transportation and industrial sectors [6] - In Q3 fiscal 2025, TEL reported revenues of $4.53 billion, a 14% increase year over year, with margins near 20% in both Transportation and Industrial segments [6][7] - TEL anticipates over $800 million in AI-related revenue for fiscal 2025, more than double the previous year [8] Strengths of TE Connectivity (TEL) - TEL's localized manufacturing, with over 70% of production near customers, mitigates supply chain risks [9] - The company’s strong free cash flow supports shareholder returns and strategic acquisitions, enhancing its competitive position [9] Share Performance and Valuation - Year-to-date, Fabrinet shares have increased by 69.5%, while TE Connectivity shares have appreciated by 47.1% [10] - Fabrinet trades at a higher price-to-sales (P/S) ratio of 3.93 compared to TEL's 3.78, reflecting greater risks associated with customer concentration and cyclical demand [13] Conclusion - Both companies are integral to the electronics ecosystem, with Fabrinet focusing on high-speed optical communications and TEL offering diversified exposure across multiple markets [16] - TEL is recommended as a better investment option due to its diversified market presence and strong cash flow, compared to Fabrinet's concentrated customer base and cyclical risks [16]

Group 1 - Fabrinet (NYSE: FN) has demonstrated strong and steady growth in both top and bottom lines, indicating solid momentum in its performance [1] - The company's current valuation is higher than its five-year average, but this increase is considered justified due to its growth prospects [1] - The focus of the analysis includes foreign stocks, particularly in the Nordic market, as well as growth stocks in the U.S. market, highlighting a diverse investment approach [1]

Core Viewpoint - Fabrinet reported better-than-expected fourth-quarter financial results for fiscal 2025, showcasing strong revenue and earnings performance [1][2]. Financial Performance - Fourth-quarter revenue reached $909.69 million, surpassing analyst estimates of $884.87 million [1]. - Adjusted earnings for the fourth quarter were $2.65 per share, exceeding estimates of $2.64 per share [1]. - The CEO highlighted that the fourth quarter capped off a remarkable year with record quarterly revenue and non-GAAP EPS at an all-time high [2]. Future Guidance - For the fiscal first quarter, Fabrinet expects revenue to be between $910 million and $950 million, compared to estimates of $916.72 million [3]. - The company anticipates first-quarter adjusted earnings to range from $2.75 to $2.90 per share, against estimates of $2.74 per share [3]. Market Reaction - Following the earnings announcement, Fabrinet shares fell by 10.3%, trading at $293.32 [3]. Analyst Ratings and Price Targets - B. Riley Securities maintained a Neutral rating and raised the price target from $184 to $220 [5]. - Barclays maintained an Equal-Weight rating and increased the price target from $234 to $329 [5]. - Rosenblatt maintained a Buy rating with a price target of $360 [5]. - Needham reiterated a Buy rating and maintained a price target of $350 [5].

Core Viewpoint - Despite exceeding earnings expectations, Fabrinet's stock fell by 9.82% in early trading on Tuesday [1] Financial Performance - Fabrinet reported adjusted earnings per share of $2.65, slightly above the FactSet analyst expectation of $2.64 [1] - The company's revenue for the fourth fiscal quarter was $909.7 million, surpassing the consensus estimate of $883.1 million [1]