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Fabrinet (FN) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

Fabrinet FN is set to report third-quarter fiscal 2019 results on May 6.

The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 6.8%.

In the last reported quarter, Fabrinet reported adjusted earnings of 97 cents per share, which beat the Zacks Consensus Estimate by a nickel and increased 34.7% year over year. Revenues increased 19.6% year over year to $403.1 million, which beat the consensus mark of $387 million.

For third-quarter fiscal 2019, Fabrinet expects revenues between $384 million and $392 million. Earnings are expected between 86 cents and 90 cents per share.

The Zacks Consensus Estimate for revenues currently stands at $389.8 million, indicating growth of 17.3% from the year-ago quarter’s reported figure.
 

Fabrinet Price and EPS Surprise

Fabrinet Price and EPS Surprise | Fabrinet Quote

 

The consensus mark for third-quarter earnings has remained steady at 89 cents over the past 30 days, suggesting growth of 25.4% from the figure reported in the year-ago quarter.

Let’s see how things are shaping up for this announcement.

Key Factors to Consider

Fabrinet’s third-quarter fiscal 2019 results are expected to benefit from strong demand from telecom end-market. Expanding customer base is also a key catalyst.

The optical communications business is anticipated to drive the top line on the back of solid revenue growth anticipated from 100 Gig transceivers.

Moreover, the company is likely to witness an increase in the adoption rate of QSFP56 400 Gig product in the to-be-reported quarter, as customers are looking for speedier transceivers.

Additionally, continued momentum in Industrial laser bodes well for Fabrinet’s non-optical communications business.

However, gross margin is expected to be negatively impacted by supply constraints related to MLCC and certain ASIC parts.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Fabrinet has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are three stocks you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat this earnings season.

Upland Software UPLD has an Earnings ESP of +0.32% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

FUJIFILM FUJIY has an Earnings ESP of +20.55% and a Zacks Rank #1.

Fortinet FTNT has an Earnings ESP of +1.49% and a Zacks Rank #2.

 

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