Fabrinet Goes Red

Fabrinet (NYSE: FN  ) reported earnings Feb. 6. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 30 (Q2), Fabrinet beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share dropped to a loss.

Margins shrank across the board.

Revenue details
Fabrinet reported revenue of $186.3 million. The three analysts polled by S&P Capital IQ expected to see revenue of $177.5 million. Sales were 48% lower than the prior-year quarter's $173.7 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.45. The four earnings estimates compiled by S&P Capital IQ averaged $0.42 per share on the same basis. GAAP EPS were -$0.96 for Q1 against $0.46 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 9.2%, 360 basis points worse than the prior-year quarter. Operating margin was -37.9%, 4,750 basis points worse than the prior-year quarter. Net margin was -34.4%, 4,300 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $76.7 million. On the bottom line, the average EPS estimate is -$0.42.

Next year's average estimate for revenue is $557.6 million. The average EPS estimate is $0.33.

Investor sentiment
! The stock has a two-star rating (out of five) at Motley Fool CAPS, with 23 members rating the stock outperform and three members rating it underperform. Among seven CAPS All-Star picks (recommendations by the highest-ranked CAPS members), four give Fabrinet a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Fabrinet is hold, with an average price target of $18.38.

Over the decades, small-cap stocks, like Fabrinet, have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

• Add Fabrinet to My Watchlist.