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Fabrinet (NYSE:FN), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$271 and falling to the lows of US$215. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Fabrinet's current trading price of US$228 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Fabrinet’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Fabrinet
What's The Opportunity In Fabrinet?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 9.9% below our intrinsic value, which means if you buy Fabrinet today, you’d be paying a fair price for it. And if you believe the company’s true value is $253.39, then there’s not much of an upside to gain from mispricing. What's more, Fabrinet’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will Fabrinet generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 34% over the next couple of years, the future seems bright for Fabrinet. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in FN’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on FN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.