Fabrinet FN is witnessing strong results from its strategy to expand beyond optical communications. Its automotive and industrial laser businesses are emerging as key growth areas. They help drive non-optical revenues to $300 million (26.5% of total revenue) in the second quarter of fiscal 2026, marking a 61% year-over-year increase and a 30% sequential rise, validating the company’s strategic shift.
Automotive revenues continued to be the largest contributor, generating $117 million (39% of Non-optical communications revenues) in the second quarter of fiscal 2026, driven by continued demand from existing automotive programs. Automotive revenues increased 12% year over year but were slightly down sequentially, as anticipated. The company expects another modest sequential decline in the third quarter of fiscal 2026. This indicates that automotive demand has predictable fluctuations, and short-term movements are not demand-driven surprises but expected patterns.
Industrial lasers contributed $41 million (13.8% of Non-optical communications revenues), up 10% year over year and 4% sequentially, indicating a consistent and stable demand environment. The High-Performance Computing segment generated $86 million in second-quarter fiscal 2026, driven by automated production lines and scaling customer demand. Along with this segment, these areas help diversify Fabrinet’s exposure toward more stable, long-term growth markets beyond optical communications.
The 61% non-optical growth year over year outpaced overall revenue expansion, suggesting the company’s ability to capture market share in adjacent verticals. The Zacks Consensus Estimate for third-quarter fiscal 2026 non-optical revenues is pegged at $338 million, indicating a year-over-year increase of 57.6%. With strength across automotive, lasers and high-performance computing, Fabrinet’s diversification beyond optics is poised to drive further upside.
Fabrinet Faces Stiff Competition
Fabrinet is facing competition from Jabil JBL and Coherent COHR, both of which are expanding in adjacent markets.
Jabil has been strengthening its presence in automotive and industrial solutions, leveraging its large-scale manufacturing capabilities to capture demand from the electrification and automation trends. Meanwhile, Coherent remains a key player in industrial lasers and optics, benefiting from rising adoption in advanced manufacturing and healthcare. Compared with Jabil and Coherent, Fabrinet’s focus on precision electro-mechanical components and EV charging infrastructure provides a differentiated positioning that could support sustained growth momentum.
Fabrinet’s Share Price Performance, Valuation and Estimates
Fabrinet’s shares have jumped 47.8% in the year-to-date (YTD) period, outperforming the Zacks Electronics-Miscellaneous Components industry and the Zacks Computer and Technology sector, which have increased 0.4% and 4.4%, respectively.
Fabrinet’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Fabrinet stock is currently trading at a forward 12-month Price/Sales ratio of 4.62X compared with the industry’s 3.53X. Fabrinet has a Value Score of F.
Fabrinet's Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Fabrinet’s third-quarter fiscal 2026 earnings is pegged at $3.56 per share, unchanged over the past 30 days. The estimate indicates 41.27% year-over-year growth.
Fabrinet Price and Consensus
Fabrinet price-consensus-chart | Fabrinet Quote
Fabrinet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).