Please ensure Javascript is enabled for purposes of website accessibility

Why Fabrinet Stock Jumped Tuesday

By Daniel Sparks - Updated Feb 6, 2018 at 12:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fabrinet just released its second-quarter results. Here's what you should know.

What happened

Shares of Fabrinet (FN 6.04%), a leading optical product manufacturing company, jumped as much as 28% on Tuesday following the company's second-quarter earnings release. The stock is up 24% at the time of this writing.

This rise likely reflects Fabrinet's better-than-expected top- and bottom-line results. Revenue for the quarter was $337.1 million, surpassing average analyst expectations of about $330 million. Non-GAAP earnings per share landed at $0.72, compared to a consensus analyst estimate of $0.70.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

Fabrinet's $337.1 million in first-quarter revenue was down from $351.2 million in the year-ago quarter. Non-GAAP EPS of $0.72 was similarly lower than its year-ago non-GAAP EPS of $0.91.

Helping support the case that investors are likely happy with Fabrinet's results, second-quarter revenue and earnings were also above management's own guidance for the quarter. This differs from last quarter, when revenue fell within its guidance range and non-GAAP earnings per share was below its forecast.

Now what

After recently meeting with customers worldwide, Fabrinet CEO Seamus Grady is optimistic, saying, "We believe that over the longer-term we remain well-positioned to drive balanced and profitable growth from our core optical communications market as well as other industries that can leverage our precision optical, electro-mechanical and electronic manufacturing reputation."

Grady's optimism for its core optical communications segment is encouraging, as it accounts for the bulk of total revenue. In Fabrinet's fiscal 2017, its core optical communications revenue represented 78% of total revenue.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fabrinet Stock Quote
Fabrinet
FN
$83.21 (6.04%) $4.74

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.