Core Insights - The article emphasizes the focus on growth and momentum stocks that are reasonably priced and expected to outperform the market in the long term [1] - It highlights a significant investment opportunity identified by David, who advised buying at the market bottom in March 2009, leading to substantial gains in major indices [1] Investment Strategy - David is characterized as a long-term investor who prioritizes quality stocks and employs options as part of his investment strategy [1] - The S&P 500 saw an increase of 367% and the Nasdaq increased by 685% from 2009 to 2019, showcasing the potential for high returns in growth stocks [1] Investor Guidance - The article aims to assist investors in making money through investments in high-quality growth stocks [1]

Core Viewpoint - Fabrinet (FN) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, thus affecting stock prices [4]. Company Performance and Outlook - The upgrade for Fabrinet suggests an improvement in its underlying business, which should lead to higher stock prices as investors respond positively to this trend [5]. - For the fiscal year ending June 2026, Fabrinet is expected to earn $13.29 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 13.6% over the past three months, indicating a positive revision trend [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Fabrinet's upgrade to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Core Viewpoint - Growth investors are attracted to stocks with above-average financial growth, but identifying such stocks can be challenging due to their inherent risks and volatility [1] Group 1: Company Overview - Fabrinet (FN) is identified as a promising growth stock, supported by a favorable Growth Score and a top Zacks Rank [2] - The company specializes in assembling optical, electro-mechanical, and electronic devices for other companies [3] Group 2: Earnings Growth - Fabrinet has a historical EPS growth rate of 24.6%, with projected EPS growth of 21.2% this year, surpassing the industry average of 18.9% [5] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Fabrinet is 12.6%, significantly higher than the industry average of -14.2% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 20.6%, compared to the industry average of 5.1% [7] Group 4: Earnings Estimate Revisions - Current-year earnings estimates for Fabrinet have been revised upward, with the Zacks Consensus Estimate increasing by 0.7% over the past month [8] Group 5: Investment Potential - Fabrinet has achieved a Growth Score of B and a Zacks Rank 2, indicating it is a potential outperformer and a solid choice for growth investors [10]

Revenue and Geographic Performance - The percentage of revenues generated from locations outside North America decreased from 61.5% in Q3 2024 to 56.9% in Q3 2025, primarily due to increased revenue from U.S. customers[114]. - Revenues by geographic region for Q3 2025 were 43.1% from North America, 47.2% from Asia-Pacific and others, and 9.7% from Europe[116]. - The company expects future revenues from customers outside North America to align with the portion of revenues from these customers in Q3 2025[115]. - Revenues increased by $173.9 million, or 21.6%, to $978.1 million for the three months ended September 26, 2025, compared to $804.2 million for the same period in 2024[150]. - Revenues from optical communications products were $746.9 million, or 76.4% of total revenues, for the three months ended September 26, 2025, increasing by $120.6 million, or 19.3% year-over-year[150]. - Revenues from non-optical communications products increased by $53.3 million, or 30.0%, to $231.2 million, representing 23.6% of total revenues for the three months ended September 26, 2025[150]. Financial Performance - Gross profit rose by $17.4 million, or 17.6%, to $116.4 million, representing 11.9% of revenues for the three months ended September 26, 2025[152]. - Operating income increased by $17.3 million, or 22.5%, to $94.2 million, maintaining 9.6% of revenues for the three months ended September 26, 2025[154]. - Net income was $95.9 million, or 9.8% of revenues, for the three months ended September 26, 2025, compared to $77.4 million, or 9.6% of revenues, for the same period in 2024[159]. - Cost of revenues increased by $156.5 million, or 22.2%, to $861.7 million, or 88.1% of revenues, for the three months ended September 26, 2025[151]. - Interest income decreased by $1.5 million, or 13.8%, to $9.4 million, or 1.0% of revenues, for the three months ended September 26, 2025[155]. - Foreign exchange loss decreased to $2.1 million, or 0.2% of revenues, for the three months ended September 26, 2025, compared to a loss of $7.1 million, or 0.9% of revenues, for the same period in 2024[156]. - The effective tax rate increased to 5.4% for the three months ended September 26, 2025, compared to 4.2% for the same period in 2024, due to higher income subject to tax[158]. - Other comprehensive loss for Q3 2025 was $3.0 million, or 0.3% of revenues, compared to income of $15.0 million, or 1.9% of revenues in Q3 2024[160]. Expenses and Costs - The company expects SG&A expenses for fiscal year 2026 to increase compared to fiscal year 2025, mainly due to higher information technology and employee costs[121]. - Employee costs are anticipated to rise due to increasing wages in Thailand and the PRC, impacting profit margins[119]. - The company anticipates maintaining favorable pricing on services despite expected price decreases for manufactured products over time[112]. Cash Flow and Investments - Cash, cash equivalents, and short-term investments increased to $968.8 million as of September 26, 2025, from $908.9 million as of September 27, 2024, with no outstanding debt[161]. - Net cash provided by operating activities rose to $102.6 million in Q3 2025 from $83.2 million in Q3 2024, attributed to improved working capital management[166]. - Cash used in investing activities increased to $81.0 million in Q3 2025, primarily due to new manufacturing facility construction and higher capital expenditures[168]. - The company began construction of a new manufacturing facility of approximately 2.0 million square feet at a cost of $132.5 million (Thai baht 4.45 billion) in February 2025[165]. - The increase in cash used in financing activities in Q3 2025 was due to higher share repurchases and withholding tax related to restricted share units[169]. Foreign Currency and Derivatives - As of September 26, 2025, the company had $196.0 million of foreign currency forward contracts outstanding on Thai baht payables[126]. - The company recorded an unrealized loss of $1.3 million related to derivatives not designated as hedging instruments for Q3 2025[129]. - Unrealized loss from foreign currency forward contracts was $1.3 million in Q3 2025, compared to a gain of $4.1 million in Q3 2024[177]. - A 10% weakening of the U.S. dollar against the Thai baht and RMB would decrease the net dollar position by approximately $12.8 million as of September 26, 2025[177]. Company Strategy and Outlook - The company has a diverse customer base in complex industries, including optical communications, automotive, and industrial lasers[110]. - The company is focused on expanding manufacturing capacity and diversifying revenue sources through potential acquisitions[108]. - The company believes current cash and investments will meet working capital and capital expenditure needs for at least the next 12 months[165]. - The weighted-average interest rate on cash and cash equivalents was 4.0% for Q3 2025, down from 4.6% in Q3 2024[162].

Group 1 - The article does not provide any specific content related to a company or industry [1]

Financial Data and Key Metrics Changes - First-quarter revenue reached $978 million, a 22% increase year-over-year and an 8% increase from Q4 [5][9] - Non-GAAP earnings per share (EPS) were $2.92, reflecting strong revenue flow to the bottom line [5][9] - Gross margin was 12.3%, down 30 basis points from Q4, but in line with expectations [11] Business Line Data and Key Metrics Changes - Optical communications revenue was $747 million, up 19% year-over-year and 8% from Q4 [9][10] - Telecom revenue hit a record $412 million, surging 59% year-over-year and 15% from Q4, primarily driven by data center interconnect (DCI) products [9][10] - DCI revenue was $138 million, representing a 92% increase year-over-year and a 29% increase from Q4 [10] - DataCom revenue totaled $273 million, down 17% year-over-year but only 1% down from Q4, indicating stronger-than-expected performance [10] - Non-optical communications revenue was $231 million, up 3% year-over-year, driven by high-performance computing (HPC) revenue of $15 million [10] Market Data and Key Metrics Changes - Automotive revenue was $122 million, up 19% year-over-year but down 5% from Q4 [10] - Industrial laser revenue was $40 million, up 12% year-over-year and flat sequentially [10] Company Strategy and Development Direction - The company is optimistic about continued growth in Telecom driven by DCI expansion and strong DataCom demand [8][14] - Construction of Building 10, totaling 2 million square feet, is on track for completion by the end of calendar 2026, with portions expected to be completed by mid-2026 [8][12] - The introduction of a new revenue category for HPC products is expected to significantly contribute to growth [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand trends across multiple product categories and customers [62] - The company anticipates revenue growth in Q2 to be between $1.05 billion and $1.1 billion, representing a 29% increase year-over-year at the midpoint [14] - Management acknowledged ongoing component constraints but remains optimistic about overall demand trends [6][66] Other Important Information - The company ended Q1 with cash and short-term investments of $969 million, up $35 million from Q4 [12] - Capital expenditures of $45 million were above maintenance levels due to ongoing construction of Building 10 [12] Q&A Session Summary Question: What is embedded in your December quarter outlook for DataCom? - Management refrained from commenting on individual components but emphasized the company's position to capitalize on the generational transition to photonics [17] Question: Does the HPC program take into account other customer engagements? - The HPC program is expected to grow significantly, with potential for multiple customers in the future [20][23] Question: How do the ramps of the HPC customer compare to the new Telecom customer? - The HPC product is complex and has a slower ramp-up, while the Telecom product is new and growing in the market [28] Question: What are the main drivers for the projected $100 million increase in revenue? - Key growth drivers include the HPC program, new Telecom products, and strong DCI performance [32] Question: How many customers contributed to the sequential growth in Telecom? - The growth was driven by a mix of customers across traditional Telecom and DCI, not reliant on any single customer [36] Question: What is the status of the share repurchase program? - The company has a 10b5-1 Plan in place and is focused on investing in future growth, including capital expenditures for Building 10 [44][50] Question: Is the component supply situation improving? - Management believes the supply situation will improve, although some components remain in tight supply [66]

Financial Data and Key Metrics Changes - First-quarter revenue reached $978 million, a 22% increase year-over-year and an 8% increase from Q4 [5][9] - Non-GAAP earnings per share (EPS) were $2.92, reflecting strong revenue flow to the bottom line [5][11] - Gross margin was 12.3%, down 30 basis points from Q4, but in line with expectations [11] - Operating cash flow for the quarter was $103 million, with cash and short-term investments totaling $969 million, up $35 million from Q4 [12] Business Line Data and Key Metrics Changes - Optical communications revenue was $747 million, up 19% year-over-year and 8% from Q4, with telecom revenue hitting a record $412 million, a 59% increase year-over-year and 15% from Q4 [9][10] - Data center interconnect (DCI) revenue was $138 million, a 92% increase year-over-year and 29% from Q4 [10] - DataCom revenue totaled $273 million, down 17% year-over-year but only 1% from Q4, indicating stronger-than-expected performance from key customers [10][11] - Non-optical communications revenue was $231 million, up 3% year-over-year, driven by high-performance computing (HPC) revenue of $15 million [10] Market Data and Key Metrics Changes - The company anticipates strong growth in HPC as the program ramps up, contributing significantly to future revenue [13] - Automotive revenue was $122 million, up 19% year-over-year but down 5% from Q4 [10] - Industrial laser revenue remained flat at $40 million, with a 12% increase year-over-year [10] Company Strategy and Development Direction - The company is focused on expanding its capacity with the construction of Building 10, expected to be completed by the end of calendar 2026, to support rapid growth [8][12] - Management is optimistic about continued growth in telecom driven by DCI expansion and strong DataCom demand [8][13] - The introduction of a new revenue category for HPC products is seen as a significant growth driver moving forward [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong business momentum into the second quarter, projecting revenue between $1.05 billion and $1.1 billion, representing a 29% year-over-year growth at the midpoint [13][14] - The company is optimistic about demand trends across multiple product categories and believes it is well-positioned to capitalize on growth opportunities [8][59] Other Important Information - The share repurchase program was less active this quarter, with only 970 shares repurchased, as capital is being allocated towards growth investments [12][40] - The company maintains a 10b5-1 plan for share repurchases, focusing on investing in future growth and capacity expansions [40][41] Q&A Session Summary Question: What is embedded in your December quarter outlook for DataCom? - Management refrained from commenting on individual components but emphasized the company's position to capitalize on the ongoing transition to photonics [16][17] Question: Does the HPC program take into account other customer engagements? - The HPC program is seen as a separate category with potential for growth, and management is optimistic about expanding customer engagements in this area [18][19] Question: How do the ramps of the HPC customer compare to the new telecom customer? - The ramps are different due to the nature of the products, with HPC being complex and requiring time to scale, while telecom products are newer and ramping up [24][25] Question: What are the main drivers for the projected revenue increase? - Management highlighted multiple growth drivers including HPC, new telecom products, and strong DCI performance, indicating no shortage of demand [28][29] Question: Can you elaborate on the share repurchase activity? - The share repurchase was driven by a 10b5-1 plan, with a focus on investing in growth rather than active repurchases in the open market [40][41] Question: Is the component supply situation improving? - Management indicated that while some components remain in tight supply, they expect improvements as suppliers ramp up capacity [62][63]

Financial Data and Key Metrics Changes - First-quarter revenue reached $978 million, a 22% increase year-over-year and an 8% increase from Q4 [4][7] - Non-GAAP earnings per share (EPS) were $2.92, reflecting strong revenue growth directly impacting the bottom line [4][9] - Gross margin for the first quarter was 12.3%, down 30 basis points from Q4, but in line with expectations [9] Business Line Data and Key Metrics Changes - Optical communications revenue was $747 million, up 19% year-over-year and 8% from Q4 [7][8] - Telecom revenue hit a record $412 million, surging 59% year-over-year and 15% from Q4, primarily driven by data center interconnect (DCI) products [7][8] - DCI revenue was $138 million, representing a 92% increase year-over-year and a 29% increase from Q4 [8] - DataCom revenue totaled $273 million, down 17% year-over-year but only 1% from Q4, indicating stronger-than-expected demand [8] - Non-optical communications revenue was $231 million, up 3% year-over-year and 5% from Q4, driven by high-performance computing (HPC) revenue of $15 million [8] Market Data and Key Metrics Changes - Automotive revenue was $122 million, up 19% year-over-year but down 5% from Q4 [8] - Industrial laser revenue was $40 million, up 12% year-over-year and flat sequentially [8] Company Strategy and Development Direction - The company is optimistic about extending strong momentum into the second quarter, with multiple growth drivers across its business [6][11] - Construction of Building 10, totaling 2 million square feet, is on track for completion by the end of calendar 2026, with portions expected to be completed by mid-2026 to support growth [6][10] - The introduction of a new revenue category for HPC products is expected to scale significantly over the coming quarters [5][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth driven by strong demand trends across various segments, particularly in telecom and HPC [4][11] - The company anticipates second-quarter revenue to be in the range of $1.05-$1.1 billion, representing a 29% increase year-over-year at the midpoint [11][12] - Management acknowledged ongoing component constraints but remains optimistic about overall demand trends [5][49] Other Important Information - The company ended the first quarter with cash and short-term investments of $969 million, up $35 million from Q4 [10] - Capital expenditures of $45 million were above maintenance levels due to ongoing construction of Building 10 [10] Q&A Session Summary Question: What is embedded in your December quarter outlook for DataCom? - Management refrained from commenting on individual components but emphasized their position to capitalize on the ongoing transition to photonics [15] Question: Does the HPC program take into account other customer engagements? - The HPC program was broken out as a separate category due to its complexity and potential for growth, with initial engagements going well [17][19] Question: How do the ramps of the HPC customer compare to the new telecom customer? - The HPC product is complex and has a slower ramp, while the new telecom product is a new offering that will grow as it gains market traction [23][25] Question: How many customers drove the sequential growth in telecom? - The growth was driven by a mix of customers across traditional telecom and DCI, indicating broad-based demand [30] Question: Can you discuss the share repurchase activity? - The share repurchase was limited due to a focus on capital allocation for growth, particularly in Building 10 expansion [36][37] Question: Is the component supply situation improving? - Management indicated that while some components remain in tight supply, they expect improvements as suppliers ramp up capacity [49][50]

Core Viewpoint - Fabrinet's first-quarter earnings report exceeded analyst expectations, leading to a significant increase in stock price [1][2]. Financial Performance - Fabrinet reported quarterly earnings of $2.92 per share, surpassing the analyst estimate of $2.82 [2]. - Quarterly revenue reached $978.12 million, exceeding the Street estimate of $933.71 million [2]. Management Commentary - CEO Seamus Grady highlighted that the record revenue was driven by strong telecom performance, early contributions from new High-Performance Computing revenue, and a smaller-than-expected decline in datacom revenue [3]. Future Outlook - For the second quarter, Fabrinet anticipates adjusted EPS between $3.15 and $3.30, compared to the analyst estimate of $2.97 [4]. - Revenue guidance for the second quarter is projected to be between $1.05 billion and $1.1 billion, exceeding the estimate of $981.08 million [4]. Stock Performance - Following the earnings report, Fabrinet's stock rose by 9.69%, reaching $485.90 in extended trading [4].

COMPANY OVERVIEW November 3, 2025 1 Disclaimer This presentation and the accompanying oral presentation contain "forward-looking" statements that are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements other than statements of historical fact contained in this presentation, including information concerning our business plans and objectives, potential growth opportunities, competitive position, industry environm ...