Fabrinet shares tumble despite record Q2 results

Investing.com -- Fabrinet (NYSE: FN) shares tumbled 10% in after-hours trading on Monday despite reporting second-quarter fiscal 2026 results that significantly exceeded analyst expectations, with record revenue and earnings.

The optical manufacturing services provider posted adjusted earnings per share of $3.36, beating the analyst estimate of $3.25 by $0.11. Revenue surged to $1.13 billion, exceeding the consensus estimate of $1.08 billion and representing a 35.9% increase YoY from $833.6 million in the same quarter last year.

"We delivered an exceptional second quarter with record revenue and earnings that significantly exceeded our guidance ranges," said Seamus Grady, Chairman and Chief Executive Officer of Fabrinet. "Multiple large, key strategic programs across our business all contributed to our outstanding performance."

The company issued strong guidance for the third quarter, projecting revenue between $1.15 billion and $1.20 billion, above the consensus estimate of $1.133 billion. Fabrinet expects adjusted earnings per share of $3.45 to $3.60, also exceeding analyst expectations of $3.44.

Despite the strong results and outlook, investors appeared to take profits after the stock's recent gains. The company demonstrated strong execution and operating leverage during the quarter, which helped generate the record earnings performance.

For the second quarter, Fabrinet's non-GAAP gross margin was 12.4%, unchanged from the same period last year. Non-GAAP operating margin improved to 10.9% from 10.6% in the prior-year quarter.

The company's performance was driven by multiple key strategic programs across its business segments, with management expressing confidence that these same business drivers will continue into the third quarter.

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