Fabrinet shares fell 8.6% in pre-market trading on Tuesday after investors focused on weaker margins, negative free cash flow, and a softer near-term profit outlook despite stronger-than-expected fiscal fourth-quarter 2026 revenue and earnings. Revenue reached $1.316 billion, ahead of the consensus estimate of approximately $1.27 billion, and non-GAAP earnings per share came in at $4.10, beating the $3.81 forecast by more than 7%. Gross margin declined by 30 basis points year-over-year, and free cash flow turned negative at -$37 million, largely due to increased capital expenditure for capacity expansion in Thailand and California. Management's guidance for the first quarter of fiscal 2027 implies a revenue midpoint of $1.405 billion, above Wall Street consensus, but indicates a sequential decline in earnings per share due to seasonal factors. The company also cited uncertainty surrounding Thailand's new top-up tax regime and continuing component supply constraints as potential challenges, while broader market weakness, with the NASDAQ down 1.0% and the S&P 500 down 0.4%, amplified the negative reaction.
FabrinetMargins declined, free cash flow turned negative, and guidance implies sequential EPS decline despite revenue beat.
