Posted 12/18/2023, 4:09:15 PM
Fabrinet's Soaring Share Price: Justified by Growth Prospects or Overvalued?
- Fabrinet's high P/E ratio of 27.6x suggests its shares could be overvalued compared to other companies
- Its earnings have been growing well recently, up 14% last year and 109% over 3 years, explaining some of the high P/E
- Analysts forecast Fabrinet's earnings will grow at 13% annually over the next 3 years, in line with broader market growth
- Investors seem more optimistic about Fabrinet's growth prospects than analysts, based on the high P/E multiple
- If earnings growth slows down, the share price and P/E ratio could decline to more reasonable levels