Why Fabrinet Stock Popped Today

By Steve SymingtonMarketsFool.com

What happened

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Shares of Fabrinet (NYSE: FN) popped as much as 12.7% early Tuesday and then settled to close up 8.3% after the advanced optical packaging company announced strong fiscal third-quarter 2017 results.

So what

Quarterly revenue rose 46.2% year over year to $366.8 million and translated to 46.6% growth in adjusted net income to $30.5 million. Adjusted net income per share increased 42.9%, to $0.80. By comparison -- and keeping in mind that adjusted earnings included a foreign exchange loss of $3.7 million, or $0.10 per share -- analysts' consensus estimates predicted adjusted earnings of $0.88 per share on lower revenue of $362.2 million.

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Fabrinet CEO Tom Mitchell stated:

Now what

For the current (fiscal fourth) quarter, Fabrinet expects revneue of $361 million to $365 million, and adjusted net income per diluted share of $0.82 to $0.84. Curiously, both ranges fell below investors' expectations for fiscal fourth-quarter revenue of $371 million and adjusted earnings of $0.88 per share.

Of course, given Fabrinet's relative outperformance in fiscal Q3, this doesn't rule out the possibility that it's once again under-promising with the aim of over-delivering. Fabrinet's quarter also helped alleviate fears that it would feel the brunt of industry slowdowns in China. So with shares still down more than 16% over the past three months as those fears had intensified leading up to today's report, it's no surprise to see Fabrinet stock rebounding today.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.