We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Fabrinet's Non-Optical Growth Accelerates: More Upside Ahead?
Read MoreHide Full Article
Key Takeaways
Fabrinet's non-optical revenues hit $300M in Q2 FY26, up 61% year over year and 30% sequentially.
FN's automotive segment led with $117M in revenues; industrial lasers and HPC added steady growth momentum.
FN expects Q3 non-optical revenues of $338M, signaling continued strength beyond optics.
Fabrinet (FN - Free Report) is witnessing strong results from its strategy to expand beyond optical communications. Its automotive and industrial laser businesses are emerging as key growth areas. They help drive non-optical revenues to $300 million (26.5% of total revenue) in the second quarter of fiscal 2026, marking a 61% year-over-year increase and a 30% sequential rise, validating the company’s strategic shift.
Automotive revenues continued to be the largest contributor, generating $117 million (39% of Non-optical communications revenues) in the second quarter of fiscal 2026, driven by continued demand from existing automotive programs. Automotive revenues increased 12% year over year but were slightly down sequentially, as anticipated. The company expects another modest sequential decline in the third quarter of fiscal 2026. This indicates that automotive demand has predictable fluctuations, and short-term movements are not demand-driven surprises but expected patterns.
Industrial lasers contributed $41 million (13.8% of Non-optical communications revenues), up 10% year over year and 4% sequentially, indicating a consistent and stable demand environment. The High-Performance Computing segment generated $86 million in second-quarter fiscal 2026, driven by automated production lines and scaling customer demand. Along with this segment, these areas help diversify Fabrinet’s exposure toward more stable, long-term growth markets beyond optical communications.
The 61% non-optical growth year over year outpaced overall revenue expansion, suggesting the company’s ability to capture market share in adjacent verticals. The Zacks Consensus Estimate for third-quarter fiscal 2026 non-optical revenues is pegged at $338 million, indicating a year-over-year increase of 57.6%. With strength across automotive, lasers and high-performance computing, Fabrinet’s diversification beyond optics is poised to drive further upside.
Fabrinet Faces Stiff Competition
Fabrinet is facing competition from Jabil (JBL - Free Report) and Coherent (COHR - Free Report) , both of which are expanding in adjacent markets.
Jabil has been strengthening its presence in automotive and industrial solutions, leveraging its large-scale manufacturing capabilities to capture demand from the electrification and automation trends. Meanwhile, Coherent remains a key player in industrial lasers and optics, benefiting from rising adoption in advanced manufacturing and healthcare. Compared with Jabil and Coherent, Fabrinet’s focus on precision electro-mechanical components and EV charging infrastructure provides a differentiated positioning that could support sustained growth momentum.
Fabrinet’s Share Price Performance, Valuation and Estimates
From a valuation standpoint, Fabrinet stock is currently trading at a forward 12-month Price/Sales ratio of 4.62X compared with the industry’s 3.53X. Fabrinet has a Value Score of F.
Fabrinet's Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Fabrinet’s third-quarter fiscal 2026 earnings is pegged at $3.56 per share, unchanged over the past 30 days. The estimate indicates 41.27% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
Fabrinet's Non-Optical Growth Accelerates: More Upside Ahead?
Key Takeaways
Fabrinet (FN - Free Report) is witnessing strong results from its strategy to expand beyond optical communications. Its automotive and industrial laser businesses are emerging as key growth areas. They help drive non-optical revenues to $300 million (26.5% of total revenue) in the second quarter of fiscal 2026, marking a 61% year-over-year increase and a 30% sequential rise, validating the company’s strategic shift.
Automotive revenues continued to be the largest contributor, generating $117 million (39% of Non-optical communications revenues) in the second quarter of fiscal 2026, driven by continued demand from existing automotive programs. Automotive revenues increased 12% year over year but were slightly down sequentially, as anticipated. The company expects another modest sequential decline in the third quarter of fiscal 2026. This indicates that automotive demand has predictable fluctuations, and short-term movements are not demand-driven surprises but expected patterns.
Industrial lasers contributed $41 million (13.8% of Non-optical communications revenues), up 10% year over year and 4% sequentially, indicating a consistent and stable demand environment. The High-Performance Computing segment generated $86 million in second-quarter fiscal 2026, driven by automated production lines and scaling customer demand. Along with this segment, these areas help diversify Fabrinet’s exposure toward more stable, long-term growth markets beyond optical communications.
The 61% non-optical growth year over year outpaced overall revenue expansion, suggesting the company’s ability to capture market share in adjacent verticals. The Zacks Consensus Estimate for third-quarter fiscal 2026 non-optical revenues is pegged at $338 million, indicating a year-over-year increase of 57.6%. With strength across automotive, lasers and high-performance computing, Fabrinet’s diversification beyond optics is poised to drive further upside.
Fabrinet Faces Stiff Competition
Fabrinet is facing competition from Jabil (JBL - Free Report) and Coherent (COHR - Free Report) , both of which are expanding in adjacent markets.
Jabil has been strengthening its presence in automotive and industrial solutions, leveraging its large-scale manufacturing capabilities to capture demand from the electrification and automation trends. Meanwhile, Coherent remains a key player in industrial lasers and optics, benefiting from rising adoption in advanced manufacturing and healthcare. Compared with Jabil and Coherent, Fabrinet’s focus on precision electro-mechanical components and EV charging infrastructure provides a differentiated positioning that could support sustained growth momentum.
Fabrinet’s Share Price Performance, Valuation and Estimates
Fabrinet’s shares have jumped 47.8% in the year-to-date (YTD) period, outperforming the Zacks Electronics-Miscellaneous Components industry and the Zacks Computer and Technology sector, which have increased 0.4% and 4.4%, respectively.
Fabrinet’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Fabrinet stock is currently trading at a forward 12-month Price/Sales ratio of 4.62X compared with the industry’s 3.53X. Fabrinet has a Value Score of F.
Fabrinet's Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Fabrinet’s third-quarter fiscal 2026 earnings is pegged at $3.56 per share, unchanged over the past 30 days. The estimate indicates 41.27% year-over-year growth.
Fabrinet Price and Consensus
Fabrinet price-consensus-chart | Fabrinet Quote
Fabrinet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.