Fabrinet Story

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FN -- USA Stock  

USD 61.61  0.66  1.06%

While some of us are excited about technology space, it makes sense to outline Fabrinet in greater detail to make a better assessment of its actual value. We will analyze why Fabrinet investors may still consider a stake in the business. Is Fabrinet valuation justified? Here I will cover 2020 perspective on the current valuation of the entity to give you a better outlook on taking a possible position in this stock.
Published over a month ago
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Is Fabrinet well positioned for September economic uncertainties?
This firm reports 67.13 M of total liabilities with total debt to equity ratio (D/E) of 0.07, which may suggest the firm is not taking enough advantage from financial leverage. Fabrinet is OVERVALUED at 63.82 per share with modest projections ahead.
We determine the current worth of Fabrinet using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Fabrinet based exclusively on its fundamental and basic technical indicators. By analyzing Fabrinet's financials, quarterly and monthly indicators, and related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Fabrinet's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Fabrinet. We calculate exposure to Fabrinet's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Fabrinet's related companies.

Fabrinet Investment Alerts

Fabrinet investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Fabrinet performance across your portfolios.Please check all investment alerts for Fabrinet

Fabrinet Valuation Ratios as Compared to Competition

Our valuation model uses many indicators to compare Fabrinet value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Fabrinet competition to find correlations between indicators driving the intrinsic value of Fabrinet.

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

Payment of 6082 shares by Seamus Grady of Fabrinet subject to Rule 16b-3

Legal trades by Fabrinet insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Fabrinet insider trading alert for payment of ordinary shares by Seamus Grady, Chief Executive Officer, on 24th of September 2020. This event was filed by Fabrinet with SEC on 2020-09-24. Statement of changes in beneficial ownership - SEC Form 4. Seamus Grady currently serves as chief executive officer, director of Fabrinet [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Breaking down the case for Fabrinet

The latest rise in Fabrinet short term price appreciation could raise concerns from institutional investors as the firm closed today at a share price of 72.83 on 313,371 in volume. The company executives have successfully maneuvered the firm at convenient times to take advantage of all market conditions in July. The stock standard deviation of daily returns for 30 days investing horizon is currently 2.21. The current volatility is consistent with the ongoing market swings in July 2020 as well as with Fabrinet unsystematic, company-specific events.

Margins Breakdown

Fabrinet profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Fabrinet itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Fabrinet profit margins.
Profit Margin
EBITDA Margin0.0985
Gross Margin0.11
Profit Margin0.0729

Fabrinet Earnings Before Interest Taxes and Depreciation Amortization USD is quite stable at the moment. Moreover, Fabrinet Average Equity is quite stable at the moment.

Possible September reversion of Fabrinet?

Skewness just dropped to -0.78, may entail upcoming price decline. Fabrinet currently demonstrates below-verage downside deviation. It has Information Ratio of 0.08 and Jensen Alpha of 0.42. However, we do advice investors to further question Fabrinet expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Final Take On Fabrinet

Whereas some firms within the electronic components industry are still a little expensive, even after the recent corrections, Fabrinet may offer a potential longer-term growth to institutional investors. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither take up nor exit any shares of Fabrinet at this time. The Fabrinet risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Fabrinet.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Fabrinet. Please refer to our Terms of Use for any information regarding our disclosure principles.

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