Fabrinet Story

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FN -- USA Stock  

USD 61.68  0.52  0.84%

Allowing for the 90-days total investment horizon, Fabrinet is expected to generate 1.5 times more return on investment than the market. However, the company is 1.5 times more volatile than its market benchmark. It trades about 0.17 of its potential returns per unit of risk. The DOW is currently generating roughly 0.14 per unit of risk. As many adventurous traders are excited about consumer goods space, it is only fair to outline the risk of shorting Fabrinet based on its current volatility spike. We are going to inspect if the current expected returns justify Fabrinet's volatility.
Published over a month ago
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Is Fabrinet (NYSE:FN) a good hedge for your existing portfolios?
Fabrinet reports roughly 457.76 M in cash with 146.34 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 12.47.
Volatility is a rate at which the price of Fabrinet or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Fabrinet may increase or decrease. In other words, similar to Fabrinet's beta indicator, it measures the risk of Fabrinet and helps estimate the fluctuations that may happen in a short period of time. So if prices of Fabrinet fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is Fabrinet's Liquidity

Fabrinet financial leverage refers to using borrowed capital as a funding source to finance Fabrinet ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Fabrinet financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Fabrinet's total debt and its cash.

How Fabrinet utilizes its cash?

To perform a cash flow analysis of Fabrinet, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Fabrinet is receiving and how much cash it distributes out in a given period. The Fabrinet cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Fabrinet Net Cash Flow from Operations is quite stable at the moment as compared to the past year. The company's current value of Net Cash Flow from Operations is estimated at 116.63 Million

Fabrinet Volatility Drivers

Fabrinet unsystematic risk is unique to Fabrinet and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Fabrinet you can also buy Benchmark Electronics. You can also mitigate this risk by investing in the electronic components sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Fabrinet important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Fabrinet income statement and balance sheet. Here are more details about Fabrinet volatility.
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