Shares of Fabrinet (FN) tumbled 5.30% in after-hours trading on Monday, despite the company reporting better-than-expected fourth-quarter results for fiscal year 2025. The sharp decline suggests investors may be focusing on the company's forward guidance and other factors within the report.

For the fourth quarter, Fabrinet posted adjusted earnings per share of $2.65, surpassing analyst estimates of $2.64. Revenue also beat expectations, coming in at $909.7 million compared to the anticipated $884.9 million. This represents a significant 20.8% year-over-year increase in revenue. However, the company's non-GAAP free cash flow saw a dramatic drop to $4.7 million, primarily due to increased capital spending and inventory growth.

Looking ahead, Fabrinet provided guidance for the first quarter of fiscal 2026, projecting revenue between $910 million and $950 million, and non-GAAP earnings per share in the range of $2.75 to $2.90. While this outlook suggests continued growth, investors may be concerned about potential margin pressures and the sustainability of the company's rapid expansion. The after-hours stock movement indicates that market participants are reassessing Fabrinet's valuation in light of these forward-looking statements and the company's capital allocation strategy.