NYSE:FN is not too expensive for the growth it is showing.

Our stock screener has singled out FABRINET (NYSE:FN) as an attractive growth opportunity. NYSE:FN is demonstrating remarkable growth potential while maintaining strong financial indicators, making it a reasonably priced option. We'll explore this further.

Analyzing Growth Metrics

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:FN has achieved a 7 out of 10:

• FN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.39%, which is quite impressive.
• The Earnings Per Share has been growing by 18.44% on average over the past years. This is quite good.
• Looking at the last year, FN shows a quite strong growth in Revenue. The Revenue has grown by 12.20% in the last year.
• Measured over the past years, FN shows a quite strong growth in Revenue. The Revenue has been growing by 12.72% on average per year.
• The Earnings Per Share is expected to grow by 18.01% on average over the next years. This is quite good.
• The Revenue is expected to grow by 14.34% on average over the next years. This is quite good.

Valuation Assessment of NYSE:FN

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:FN has earned a 6 for valuation:

• 72.50% of the companies in the same industry are more expensive than FN, based on the Price/Earnings ratio.
• The average S&P500 Price/Earnings ratio is at 28.39. FN is valued slightly cheaper when compared to this.
• FN's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. FN is cheaper than 80.00% of the companies in the same industry.
• FN's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.37.
• FN's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. FN is cheaper than 63.33% of the companies in the same industry.
• FN's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. FN is cheaper than 70.83% of the companies in the same industry.
• FN has an outstanding profitability rating, which may justify a higher PE ratio.
• FN's earnings are expected to grow with 18.01% in the coming years. This may justify a more expensive valuation.

A Closer Look at Health for NYSE:FN

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:FN has earned a 9 out of 10:

• FN has an Altman-Z score of 10.61. This indicates that FN is financially healthy and has little risk of bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 10.61, FN belongs to the top of the industry, outperforming 88.33% of the companies in the same industry.
• FN has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
• FN has a Current Ratio of 3.66. This indicates that FN is financially healthy and has no problem in meeting its short term obligations.
• FN has a better Current ratio (3.66) than 68.33% of its industry peers.
• FN has a Quick Ratio of 2.90. This indicates that FN is financially healthy and has no problem in meeting its short term obligations.
• With a decent Quick ratio value of 2.90, FN is doing good in the industry, outperforming 75.00% of the companies in the same industry.

Analyzing Profitability Metrics

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:FN was assigned a score of 8 for profitability:

• FN's Return On Assets of 12.65% is amongst the best of the industry. FN outperforms 93.33% of its industry peers.
• With an excellent Return On Equity value of 16.89%, FN belongs to the best of the industry, outperforming 85.83% of the companies in the same industry.
• FN has a better Return On Invested Capital (12.32%) than 87.50% of its industry peers.
• FN had an Average Return On Invested Capital over the past 3 years of 12.81%. This is above the industry average of 8.99%.
• With an excellent Profit Margin value of 10.28%, FN belongs to the best of the industry, outperforming 82.50% of the companies in the same industry.
• FN's Profit Margin has improved in the last couple of years.
• FN has a Operating Margin of 9.68%. This is in the better half of the industry: FN outperforms 80.00% of its industry peers.
• FN's Operating Margin has improved in the last couple of years.
• In the last couple of years the Gross Margin of FN has grown nicely.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

Our latest full fundamental report of FN contains the most current fundamental analsysis.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.