Why Fabrinet Shares Plunged

Is Fabrinet's drop meaningful? Or just another movement?

Feb 4, 2014 at 9:09PM

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) fell more than 10% during Tuesday's intraday trading after the company's released solid fiscal second quarter results, but followed with disappointing forward guidance. 

So what: Quarterly revenue rose 6.7% year over year to $178.6 million, which translated to 15.9% growth in adjusted net income to $16 million, or $0.45 per share. By comparison, analysts were expecting earnings of $0.41 per share on sales of $167.43 million.

For the current quarter, however, Fabrinet expects revenue to be in the range of $162 million to $166 million, with adjusted net income per share of $0.32 to $0.34. Analysts, on average, were modeling earnings of $0.39 per share on sales of $172.92 million.

Now what: During the subsequent earnings conference call, management blamed the guidance weakness largely on sequential declines in their optical business. At the same time, CEO David Mitchell did insist the weakness should prove temporary, and that they should return to sequential growth after the current quarter is finished.

But with shares trading at just 8.2 times last year's earnings, it appears the stock already reflects much of that pessimism. Assuming the current weakness isn't a pervasive long-term problem, then, I think Fabrinet stock could still prove a bargain for patient investors.

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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