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Why Fabrinet Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Fabrinet (NYSE: FN  ) finished up 11% today after it flew past estimates in its quarterly report.

So what: The electro-optical supply-chain specialist posted a per-share profit of $0.55, better than estimates of $0.47, while revenue beat expectations as well, growing 8.2% to $171.6 million. CEO Tom Mitchell described the quarter as a "strong start" to the year, and said, "With our strong customer relationships and expanding pipeline of new business, I am confident that we will be able to deliver a strong year of profitable growth." Fabrinet issued guidance ahead of Wall Street expectations, eyeing sales of $170 million to $174 million for the current quarter, and adjusted EPS of $0.40-$0.42.

Now what: It's hard to argue with a report like this, beating on both top and bottom lines and providing upside guidance. With their P/E of just 9.6 and solid sales growth, I'd expect Fabrinet shares to move higher if it can deliver on its promising guidance.

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9/23/2016 4:02 PM
FN $44.17 Down -0.55 -1.23%
Fabrinet CAPS Rating: ***