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Is Fabrinet Stock's 43.59X P/E Still Worth it? Buy, Sell or Hold?
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Key Takeaways
FN is priced at 43.59x forward P/E, well above the broader Computer & Technology sector's 23.84x.
Fabrinet guided Q3 FY26 revenues of $1.15-$1.20B and non-GAAP EPS of $3.45-$3.60.
FN's optical comms revenues hit $833M in Q2 FY26; HPC jumped to $86M, with a ramp targeting over $150M.
Fabrinet (FN - Free Report) shares are overvalued, as suggested by a Value Score of F. The FN stock is trading at a forward 12-month price/earnings (P/E) of 43.59X compared with the broader Zacks Computer & Technology sector’s 23.84X.
FN shares are trading at a premium compared with peers, including TTM Technologies (TTMI - Free Report) , Jabil (JBL - Free Report) and Flex (FLEX - Free Report) . Shares of TTM Technologies, Jabil and Flex are trading at a P/E multiple of 33.15, 22.55 and 22.39, respectively.
FN Stock’s Valuation
Image Source: Zacks Investment Research
Is Fabrinet worth buying at current prices? Let’s dig deep to find out.
FN Shares Outperform Sector
Fabrinet shares have risen 49.7% year to date (YTD), outperforming the broader sector’s return of 2.4%.
We believe the stock’s appreciation from this level is limited, given intensifying competition from the likes of TTM Technologies, Jabil and Flex across domains, including electronics manufacturing services and optical components. Year to date, FN has outperformed Jabil and Flex, shares of which have returned 34.2% and 32.6%, respectively. However, Fabrinet has underperformed TTM Technologies, shares of which have jumped 75% YTD.
FN Stock’s YTD Price Performance
Image Source: Zacks Investment Research
Sluggish growth in the automotive end-market is expected to hurt Fabrinet’s top-line growth in the third quarter of fiscal 2026. The company expects revenues to grow sequentially in telecom, datacom and HPC. For the third quarter of fiscal 2026, Fabrinet guided revenues of $1.15-$1.20 billion (midpoint roughly 35% year-over-year growth) and non-GAAP earnings of $3.45-$3.60 per share. Unfavorable forex is expected to hurt FN’s results.
The Zacks Consensus Estimate for third-quarter fiscal 2026 earnings is pegged at $3.56 per share, unchanged over the past 30 days, suggesting 41.3% growth from the figure reported in the year-ago quarter.
The consensus mark for fiscal 2026 earnings is pegged at $13.60 per share, unchanged over the past 30 days, suggesting 33.73% growth from fiscal 2025’s reported figure.
FN Rides on Strong Optical Communications & HPC Demand
Fabrinet is witnessing strong growth in its optical communications business. The segment has been the largest contributor to Fabrinet’s top-line and played a key role in pushing total revenues to a record $1.13 billion in the second quarter of fiscal 2026. HPC business generated revenues of $86 million in the second quarter of fiscal 2026, up a whopping 473.3% sequentially.
Optical communications business revenues were $833 million, up 29% year over year and 11% on a sequential basis. The telecom business was the biggest driver, with revenues reaching $554 million, up 59% year over year and 17% sequentially. Fabrinet is witnessing strong growth from data center interconnect products, which generated revenues of $142 million. Revenues surged 42% year over year, driven by higher shipments of advanced optical modules like 400ZR and 800ZR. These modules help transfer huge amounts of data between data centers at high speeds, which is increasingly needed for cloud services and AI.
Meanwhile, strong demand for FN's HPC products as hyperscale customers continue to invest in computing capacity, and the ramp of HPC programs that support AI data center infrastructure bodes well for the company’s prospects.
The company expects this business to continue growing as AI infrastructure spending increases. Fabrinet stated that the current HPC program is still ramping up. Fabrinet is currently operating two fully automated production lines for this program, while additional lines are being qualified. Currently, the company is slightly more than halfway through the ramp. When the program is fully ramped, Fabrinet expects it to generate more than $150 million in revenues. The company expects to reach this level over the next few quarters as production capacity increases.
Here’s Why FN Stock is a Hold Now
FN’s expanding portfolio and strong growth from telecom, datacom and HPC end-markets are expected to improve its top-line growth over the long term. So, investors currently holding the stock should stay put.
However, Fabrinet’s near-term prospects are limited given stiff competition, sluggish growth in the automotive space and unfavorable forex. These factors don’t affect FN’s current valuation.
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Is Fabrinet Stock's 43.59X P/E Still Worth it? Buy, Sell or Hold?
Key Takeaways
Fabrinet (FN - Free Report) shares are overvalued, as suggested by a Value Score of F. The FN stock is trading at a forward 12-month price/earnings (P/E) of 43.59X compared with the broader Zacks Computer & Technology sector’s 23.84X.
FN shares are trading at a premium compared with peers, including TTM Technologies (TTMI - Free Report) , Jabil (JBL - Free Report) and Flex (FLEX - Free Report) . Shares of TTM Technologies, Jabil and Flex are trading at a P/E multiple of 33.15, 22.55 and 22.39, respectively.
FN Stock’s Valuation
Image Source: Zacks Investment Research
Is Fabrinet worth buying at current prices? Let’s dig deep to find out.
FN Shares Outperform Sector
Fabrinet shares have risen 49.7% year to date (YTD), outperforming the broader sector’s return of 2.4%.
We believe the stock’s appreciation from this level is limited, given intensifying competition from the likes of TTM Technologies, Jabil and Flex across domains, including electronics manufacturing services and optical components. Year to date, FN has outperformed Jabil and Flex, shares of which have returned 34.2% and 32.6%, respectively. However, Fabrinet has underperformed TTM Technologies, shares of which have jumped 75% YTD.
FN Stock’s YTD Price Performance
Image Source: Zacks Investment Research
Sluggish growth in the automotive end-market is expected to hurt Fabrinet’s top-line growth in the third quarter of fiscal 2026. The company expects revenues to grow sequentially in telecom, datacom and HPC. For the third quarter of fiscal 2026, Fabrinet guided revenues of $1.15-$1.20 billion (midpoint roughly 35% year-over-year growth) and non-GAAP earnings of $3.45-$3.60 per share. Unfavorable forex is expected to hurt FN’s results.
FN’s Earnings Estimate Revision Shows Steady Trend
The Zacks Consensus Estimate for third-quarter fiscal 2026 earnings is pegged at $3.56 per share, unchanged over the past 30 days, suggesting 41.3% growth from the figure reported in the year-ago quarter.
Fabrinet Price and Consensus
Fabrinet price-consensus-chart | Fabrinet Quote
The consensus mark for fiscal 2026 earnings is pegged at $13.60 per share, unchanged over the past 30 days, suggesting 33.73% growth from fiscal 2025’s reported figure.
FN Rides on Strong Optical Communications & HPC Demand
Fabrinet is witnessing strong growth in its optical communications business. The segment has been the largest contributor to Fabrinet’s top-line and played a key role in pushing total revenues to a record $1.13 billion in the second quarter of fiscal 2026. HPC business generated revenues of $86 million in the second quarter of fiscal 2026, up a whopping 473.3% sequentially.
Optical communications business revenues were $833 million, up 29% year over year and 11% on a sequential basis. The telecom business was the biggest driver, with revenues reaching $554 million, up 59% year over year and 17% sequentially. Fabrinet is witnessing strong growth from data center interconnect products, which generated revenues of $142 million. Revenues surged 42% year over year, driven by higher shipments of advanced optical modules like 400ZR and 800ZR. These modules help transfer huge amounts of data between data centers at high speeds, which is increasingly needed for cloud services and AI.
Meanwhile, strong demand for FN's HPC products as hyperscale customers continue to invest in computing capacity, and the ramp of HPC programs that support AI data center infrastructure bodes well for the company’s prospects.
The company expects this business to continue growing as AI infrastructure spending increases. Fabrinet stated that the current HPC program is still ramping up. Fabrinet is currently operating two fully automated production lines for this program, while additional lines are being qualified. Currently, the company is slightly more than halfway through the ramp. When the program is fully ramped, Fabrinet expects it to generate more than $150 million in revenues. The company expects to reach this level over the next few quarters as production capacity increases.
Here’s Why FN Stock is a Hold Now
FN’s expanding portfolio and strong growth from telecom, datacom and HPC end-markets are expected to improve its top-line growth over the long term. So, investors currently holding the stock should stay put.
However, Fabrinet’s near-term prospects are limited given stiff competition, sluggish growth in the automotive space and unfavorable forex. These factors don’t affect FN’s current valuation.
Fabrinet currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.