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 beyond the headline numbers.

Fabrinet, a provider of advanced optical packaging and precision manufacturing services, announced fourth-quarter revenue of $909.69 million, surpassing analyst estimates of $884.87 million. The company's adjusted earnings per share came in at $2.65, slightly above the expected $2.64. These results capped off what CEO Seamus Grady called "a remarkable year with strong momentum."

However, the after-hours sell-off indicates that market participants might be concerned about Fabrinet's outlook. For the first quarter of fiscal 2026, the company projects revenue between $910 million and $950 million, with adjusted earnings per share ranging from $2.75 to $2.90. While this guidance is generally in line with or slightly above analyst expectations, investors may be looking for more robust growth given the company's recent performance and valuation.

Additionally, some investors might be reacting to other financial metrics, such as the sharp drop in non-GAAP free cash flow to $4.7 million, primarily due to increased capital spending and inventory growth. This decline in free cash flow, despite strong revenue growth, could be raising questions about the company's capital efficiency and future investment needs.