Fabrinet FN delivered non-GAAP earnings per share of $1.68 for fourth-quarter fiscal 2022, which were 9 cents above the upper end of management’s guided range. The bottom line increased 28% year over year and beat the Zacks Consensus Estimate by 8.39%.
Revenues of $587.9 million were up 15% on a year-over-year basis, surpassing the consensus mark by 1.17%. The top line was positively impacted by a solid surge in optical communications and datacom revenues.
Quarter in Detail
In the fiscal fourth quarter, Fabrinet’s optical communications revenues were $464.7 million, up 20% from the year-ago fiscal quarter’s reported figure. Fabrinet’s optical revenues were driven by Telecom revenues of $371.9 million, up 20% from the year-ago quarter’s reported number.
Datacom revenues also rose 20% year over year to $92.8 million on solid development in silicon photonics revenues, which were up $151.1 million, reflecting an increase of 37% from the year-ago quarter’s figure.
Revenues from product rated at speeds of 400 gig or more were $178.9 million, up 34% year over year. However, the top line was down 5% from the level recorded in the fiscal third quarter due to rising supply constraints on some products in the reported period.
Fabrinet Price, Consensus and EPS Surprise
Fabrinet price-consensus-eps-surprise-chart | Fabrinet Quote
In the non-optical communications business sector, automotive revenues were $53.3 million, up 9.7% year over year. Industrial laser revenues were $37.2 million, down 9.5% year over year.
Other non-optical communications revenues were $30 million, up 6.4% year over year.
Adjusted gross margin was 13%, which improved 70 bps year over year. However, the same was affected by a foreign exchange loss of about 20 basis points.
Operating expenses in the fiscal fourth quarter were $13.5 million, up 12.5% from the year-ago fiscal quarter’s reading.
Operating income for the quarter was $62.8 million, up by 24.4% from the year-ago fiscal quarter’s level.
Balance Sheet & Cash Flow
As of Jun 30, 2022, Fabrinet reported cash, restricted cash and investments of $478.5 million compared with $515.1 million as of Mar 31, 2022.
Cash flow from operations was $16.3 million in the fiscal fourth quarter compared with a cash flow of $50.4 million in the fiscal third quarter.
In the fiscal fourth quarter, CapEx was $14.3 million with a free cash flow of $2.1 million compared with the previous fiscal quarter’s CapEx of $23.5 million and a free cash flow of $26.9 million.
During the fiscal quarter in review, Fabrinet repurchased approximately 353,000 shares at an average price of $88.67 per share for a total cash outlay of $31.3 million.
For fiscal 2022, Fabrinet repurchased approximately 630,000 shares for a total cash outlay of nearly $60 million.
For the first quarter of fiscal 2023, Fabrinet expects revenues in the range of $620-$640 million.
FN expects Non-GAAP net earnings per share in the range of $1.72-$1.79, based on 37.6 million outstanding shares.
Zacks Rank & Stocks to Consider
Fabrinet currently has a Zacks Rank #3 (Hold).
Fabrinet’s shares have fallen 4% compared with the Zacks Computer and Technology sector’s decline of 19.7% in the year-to-date period.
Here are some better-ranked stocks from the broader sector.
Intuit INTU carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intuit’s shares have slumped 24.9% in the year-to-date period compared with the Zacks Computer - Software industry’s decline of 15.3%. INTU is scheduled to report second-quarter 2022 results on Aug 23.
Keysight Technologies KEYS carries a Zacks Rank of 2, currently.
KEY’s shares have dropped 18% in the year-to-date period compared with the Zacks Electronics - Measuring Instruments industry’s decline of 15.3%. KEYS is scheduled to report second-quarter 2022 results on Aug 17.
Arco Platform ARCE is presently Zacks #2 Ranked.
ARCE’s shares have plunged 19.6% in the year-to-date period compared with the Zacks Internet - Software industry’s decline of 42.7%. ARCE is scheduled to report second-quarter 2022 results on Aug 18.
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