Intrinsic value of Fabrinet - FN

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$38.04

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$38.04

 
Intrinsic value

$223.57

 
Up/down potential

+488%

 
Rating

str. buy

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of FN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  26.23
  50.60
  46.04
  41.94
  38.24
  34.92
  31.93
  29.23
  26.81
  24.63
  22.67
  20.90
  19.31
  17.88
  16.59
  15.43
  14.39
  13.45
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.95
  7.65
  7.39
  7.15
Revenue, $m
  977
  1,471
  2,149
  3,050
  4,216
  5,688
  7,505
  9,698
  12,299
  15,328
  18,802
  22,732
  27,121
  31,970
  37,274
  43,026
  49,217
  55,836
  62,874
  70,321
  78,169
  86,411
  95,043
  104,064
  113,472
  123,273
  133,473
  144,079
  155,103
  166,560
  178,465
Variable operating expenses, $m
 
  1,312
  1,917
  2,721
  3,761
  5,074
  6,694
  8,651
  10,970
  13,672
  16,771
  20,277
  24,192
  28,517
  33,248
  38,379
  43,901
  49,806
  56,084
  62,727
  69,727
  77,079
  84,779
  92,825
  101,217
  109,960
  119,058
  128,518
  138,352
  148,571
  159,191
Fixed operating expenses, $m
 
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  49
  50
  51
  52
  54
  55
  56
  58
  59
  61
  62
  64
  65
  67
  69
  70
  72
  74
  76
  78
Total operating expenses, $m
  907
  1,350
  1,956
  2,761
  3,802
  5,116
  6,737
  8,695
  11,015
  13,718
  16,818
  20,326
  24,242
  28,568
  33,300
  38,433
  43,956
  49,862
  56,142
  62,786
  69,788
  77,141
  84,843
  92,890
  101,284
  110,029
  119,128
  128,590
  138,426
  148,647
  159,269
Operating income, $m
  70
  121
  193
  290
  415
  572
  768
  1,003
  1,283
  1,609
  1,983
  2,406
  2,879
  3,402
  3,973
  4,593
  5,260
  5,974
  6,733
  7,536
  8,382
  9,270
  10,201
  11,174
  12,188
  13,245
  14,345
  15,488
  16,677
  17,913
  19,197
EBITDA, $m
  87
  142
  225
  334
  476
  656
  877
  1,145
  1,463
  1,833
  2,258
  2,738
  3,275
  3,868
  4,518
  5,221
  5,979
  6,789
  7,651
  8,562
  9,523
  10,532
  11,589
  12,693
  13,845
  15,045
  16,293
  17,592
  18,942
  20,345
  21,802
Interest expense (income), $m
  1
  1
  6
  13
  22
  33
  48
  66
  88
  114
  144
  178
  217
  261
  309
  361
  418
  480
  546
  615
  689
  767
  849
  934
  1,024
  1,117
  1,215
  1,316
  1,421
  1,530
  1,644
Earnings before tax, $m
  68
  120
  187
  277
  393
  539
  720
  937
  1,195
  1,496
  1,840
  2,228
  2,662
  3,141
  3,665
  4,232
  4,842
  5,494
  6,187
  6,920
  7,692
  8,503
  9,352
  10,239
  11,164
  12,128
  13,130
  14,173
  15,256
  16,382
  17,553
Tax expense, $m
  6
  32
  50
  75
  106
  146
  194
  253
  323
  404
  497
  602
  719
  848
  989
  1,143
  1,307
  1,483
  1,671
  1,868
  2,077
  2,296
  2,525
  2,765
  3,014
  3,274
  3,545
  3,827
  4,119
  4,423
  4,739
Net income, $m
  62
  87
  137
  202
  287
  394
  525
  684
  873
  1,092
  1,343
  1,627
  1,943
  2,293
  2,675
  3,089
  3,535
  4,011
  4,517
  5,052
  5,615
  6,207
  6,827
  7,475
  8,150
  8,853
  9,585
  10,346
  11,137
  11,959
  12,813

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  285
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  856
  860
  1,256
  1,783
  2,464
  3,325
  4,386
  5,668
  7,188
  8,958
  10,989
  13,286
  15,851
  18,685
  21,785
  25,147
  28,765
  32,634
  36,747
  41,100
  45,686
  50,503
  55,548
  60,820
  66,319
  72,048
  78,009
  84,207
  90,651
  97,346
  104,305
Adjusted assets (=assets-cash), $m
  571
  860
  1,256
  1,783
  2,464
  3,325
  4,386
  5,668
  7,188
  8,958
  10,989
  13,286
  15,851
  18,685
  21,785
  25,147
  28,765
  32,634
  36,747
  41,100
  45,686
  50,503
  55,548
  60,820
  66,319
  72,048
  78,009
  84,207
  90,651
  97,346
  104,305
Revenue / Adjusted assets
  1.711
  1.710
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
  1.711
Average production assets, $m
  71
  107
  157
  223
  308
  415
  548
  708
  898
  1,119
  1,373
  1,659
  1,980
  2,334
  2,721
  3,141
  3,593
  4,076
  4,590
  5,133
  5,706
  6,308
  6,938
  7,597
  8,283
  8,999
  9,744
  10,518
  11,323
  12,159
  13,028
Working capital, $m
  417
  237
  346
  491
  679
  916
  1,208
  1,561
  1,980
  2,468
  3,027
  3,660
  4,366
  5,147
  6,001
  6,927
  7,924
  8,990
  10,123
  11,322
  12,585
  13,912
  15,302
  16,754
  18,269
  19,847
  21,489
  23,197
  24,972
  26,816
  28,733
Total debt, $m
  61
  176
  368
  624
  954
  1,371
  1,886
  2,508
  3,245
  4,104
  5,089
  6,202
  7,447
  8,821
  10,325
  11,955
  13,710
  15,586
  17,581
  19,692
  21,917
  24,253
  26,700
  29,257
  31,924
  34,702
  37,593
  40,600
  43,725
  46,972
  50,347
Total liabilities, $m
  301
  417
  609
  865
  1,195
  1,612
  2,127
  2,749
  3,486
  4,345
  5,330
  6,443
  7,688
  9,062
  10,566
  12,196
  13,951
  15,827
  17,822
  19,933
  22,158
  24,494
  26,941
  29,498
  32,165
  34,943
  37,834
  40,841
  43,966
  47,213
  50,588
Total equity, $m
  554
  443
  647
  918
  1,269
  1,712
  2,259
  2,919
  3,702
  4,614
  5,659
  6,842
  8,163
  9,623
  11,219
  12,951
  14,814
  16,806
  18,925
  21,166
  23,528
  26,009
  28,607
  31,322
  34,154
  37,105
  40,174
  43,367
  46,685
  50,133
  53,717
Total liabilities and equity, $m
  855
  860
  1,256
  1,783
  2,464
  3,324
  4,386
  5,668
  7,188
  8,959
  10,989
  13,285
  15,851
  18,685
  21,785
  25,147
  28,765
  32,633
  36,747
  41,099
  45,686
  50,503
  55,548
  60,820
  66,319
  72,048
  78,008
  84,208
  90,651
  97,346
  104,305
Debt-to-equity ratio
  0.110
  0.400
  0.570
  0.680
  0.750
  0.800
  0.840
  0.860
  0.880
  0.890
  0.900
  0.910
  0.910
  0.920
  0.920
  0.920
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
Adjusted equity ratio
  0.483
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  62
  87
  137
  202
  287
  394
  525
  684
  873
  1,092
  1,343
  1,627
  1,943
  2,293
  2,675
  3,089
  3,535
  4,011
  4,517
  5,052
  5,615
  6,207
  6,827
  7,475
  8,150
  8,853
  9,585
  10,346
  11,137
  11,959
  12,813
Depreciation, amort., depletion, $m
  17
  21
  31
  45
  62
  83
  110
  142
  180
  224
  275
  332
  396
  467
  544
  628
  719
  815
  918
  1,027
  1,141
  1,262
  1,388
  1,519
  1,657
  1,800
  1,949
  2,104
  2,265
  2,432
  2,606
Funds from operations, $m
  -1
  109
  168
  246
  348
  477
  635
  826
  1,052
  1,316
  1,617
  1,959
  2,339
  2,760
  3,219
  3,717
  4,253
  4,826
  5,435
  6,078
  6,757
  7,469
  8,215
  8,994
  9,806
  10,653
  11,534
  12,450
  13,402
  14,391
  15,419
Change in working capital, $m
  -48
  80
  109
  145
  188
  237
  292
  353
  419
  488
  559
  633
  707
  781
  854
  926
  997
  1,066
  1,133
  1,199
  1,263
  1,327
  1,390
  1,452
  1,515
  1,578
  1,642
  1,708
  1,775
  1,845
  1,917
Cash from operations, $m
  47
  -41
  59
  101
  160
  240
  342
  473
  634
  828
  1,058
  1,326
  1,633
  1,979
  2,365
  2,791
  3,257
  3,760
  4,301
  4,879
  5,493
  6,142
  6,825
  7,542
  8,292
  9,075
  9,892
  10,742
  11,627
  12,546
  13,502
Maintenance CAPEX, $m
  0
  -14
  -21
  -31
  -45
  -62
  -83
  -110
  -142
  -180
  -224
  -275
  -332
  -396
  -467
  -544
  -628
  -719
  -815
  -918
  -1,027
  -1,141
  -1,262
  -1,388
  -1,519
  -1,657
  -1,800
  -1,949
  -2,104
  -2,265
  -2,432
New CAPEX, $m
  -41
  -36
  -49
  -66
  -85
  -107
  -133
  -160
  -190
  -221
  -254
  -287
  -320
  -354
  -387
  -420
  -452
  -483
  -514
  -544
  -573
  -602
  -630
  -658
  -687
  -715
  -745
  -774
  -805
  -836
  -869
Cash from investing activities, $m
  -40
  -50
  -70
  -97
  -130
  -169
  -216
  -270
  -332
  -401
  -478
  -562
  -652
  -750
  -854
  -964
  -1,080
  -1,202
  -1,329
  -1,462
  -1,600
  -1,743
  -1,892
  -2,046
  -2,206
  -2,372
  -2,545
  -2,723
  -2,909
  -3,101
  -3,301
Free cash flow, $m
  7
  -91
  -12
  4
  31
  71
  127
  203
  302
  427
  581
  765
  980
  1,229
  1,511
  1,827
  2,176
  2,558
  2,973
  3,418
  3,894
  4,399
  4,933
  5,496
  6,085
  6,703
  7,347
  8,019
  8,718
  9,446
  10,201
Issuance/(repayment) of debt, $m
  21
  140
  192
  255
  331
  417
  515
  622
  737
  859
  985
  1,114
  1,244
  1,374
  1,503
  1,630
  1,755
  1,876
  1,995
  2,111
  2,225
  2,336
  2,447
  2,557
  2,667
  2,778
  2,891
  3,006
  3,125
  3,247
  3,375
Issuance/(repurchase) of shares, $m
  5
  0
  24
  12
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  23
  140
  216
  267
  331
  417
  515
  622
  737
  859
  985
  1,114
  1,244
  1,374
  1,503
  1,630
  1,755
  1,876
  1,995
  2,111
  2,225
  2,336
  2,447
  2,557
  2,667
  2,778
  2,891
  3,006
  3,125
  3,247
  3,375
Total cash flow (excl. dividends), $m
  30
  49
  180
  260
  361
  488
  642
  825
  1,039
  1,286
  1,565
  1,878
  2,225
  2,604
  3,015
  3,458
  3,931
  4,435
  4,968
  5,529
  6,118
  6,735
  7,380
  8,052
  8,753
  9,481
  10,238
  11,025
  11,843
  12,693
  13,576
Retained Cash Flow (-), $m
  -75
  -149
  -204
  -271
  -351
  -443
  -547
  -660
  -783
  -912
  -1,046
  -1,183
  -1,321
  -1,459
  -1,596
  -1,731
  -1,863
  -1,992
  -2,118
  -2,242
  -2,362
  -2,481
  -2,598
  -2,715
  -2,832
  -2,950
  -3,070
  -3,192
  -3,318
  -3,448
  -3,583
Prev. year cash balance distribution, $m
 
  260
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  160
  0
  0
  10
  45
  95
  165
  257
  374
  520
  696
  903
  1,144
  1,418
  1,726
  2,068
  2,442
  2,849
  3,287
  3,756
  4,255
  4,782
  5,337
  5,921
  6,531
  7,168
  7,833
  8,525
  9,245
  9,993
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  153
  0
  0
  8
  35
  69
  111
  160
  215
  272
  330
  386
  435
  476
  507
  525
  531
  525
  506
  477
  440
  397
  350
  302
  254
  209
  168
  132
  101
  75
Current shareholders' claim on cash, %
  100
  100.0
  97.9
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, medical devices, and sensors. It offers a range of optical and electro-mechanical capabilities across the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, packaging, integration, final assembly, and test. The company’s products comprise switching products, such as reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths speeds, and over various distances; tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as Infiniband, Ethernet, fiber channel, and optical backplane connectivity. It also offers solid state, diode, gas, and fiber lasers used across various industries, including semiconductor processing, biotechnology and medical device, metrology, and material processing; and sensors, such as differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. In addition, the company designs and fabricates application-specific crystals, lenses, prisms, mirrors, and laser components and substrates, as well as other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. It operates in North America, the Asia-Pacific, and Europe. The company was incorporated in 1999 and is based in George Town, the Cayman Islands.

FINANCIAL RATIOS  of  Fabrinet (FN)

Valuation Ratios
P/E Ratio 22.2
Price to Sales 1.4
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 29.3
Price to Free Cash Flow 229.3
Growth Rates
Sales Growth Rate 26.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.2%
Cap. Spend. - 3 Yr. Gr. Rate 30.1%
Financial Strength
Quick Ratio 11
Current Ratio 0
LT Debt to Equity 6.5%
Total Debt to Equity 11%
Interest Coverage 69
Management Effectiveness
Return On Assets 8.2%
Ret/ On Assets - 3 Yr. Avg. 11.2%
Return On Total Capital 10.9%
Ret/ On T. Cap. - 3 Yr. Avg. 14.4%
Return On Equity 12%
Return On Equity - 3 Yr. Avg. 15.4%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 12.3%
Gross Margin - 3 Yr. Avg. 11.5%
EBITDA Margin 8.8%
EBITDA Margin - 3 Yr. Avg. 10.8%
Operating Margin 7.2%
Oper. Margin - 3 Yr. Avg. 8.9%
Pre-Tax Margin 7%
Pre-Tax Margin - 3 Yr. Avg. 9%
Net Profit Margin 6.3%
Net Profit Margin - 3 Yr. Avg. 8.5%
Effective Tax Rate 8.8%
Eff/ Tax Rate - 3 Yr. Avg. 6.1%
Payout Ratio 0%

FN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FN stock intrinsic value calculation we used $977 million for the last fiscal year's total revenue generated by Fabrinet. The default revenue input number comes from 2016 income statement of Fabrinet. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FN stock valuation model: a) initial revenue growth rate of 50.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for FN is calculated based on our internal credit rating of Fabrinet, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Fabrinet.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FN stock the variable cost ratio is equal to 89.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $37 million in the base year in the intrinsic value calculation for FN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Fabrinet.

Corporate tax rate of 27% is the nominal tax rate for Fabrinet. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FN are equal to 7.3%.

Life of production assets of 4.2 years is the average useful life of capital assets used in Fabrinet operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FN is equal to 16.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $554 million for Fabrinet - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 36.165 million for Fabrinet is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Fabrinet at the current share price and the inputted number of shares is $1.4 billion.


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Stock chart of FN Financial statements of FN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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