 In the current market session, Fabrinet Inc. NYSE: FN is trading at 71.08, after a 4.65 drop. However, over the past month, the stock spiked by 5.70, and in the past year, by 48.09. Shareholders might be interested in knowing whether the stock is overvalued, even if the company is not performing up to par in the current session.Assuming that all other factors are held constant, this could present itself as an opportunity for shareholders trying to capitalize on the higher share price. The stock is currently below from its 52 week high by 7.50.The PE ratio measures the current share price to the companys earnings per share. It is used by long-term investors to analyze the companys current performance against its past earnings, historical data and aggregate market data for the industry or the indices, such as SP 500. A higher PE indicates that investors expect the company to perform better in the future, and the stock is probably overvalued, but not necessarily. It also shows that investors are willing to pay a higher share price currently, because they expect the company to perform better in the upcoming quarters. This leads investors to also remain optimistic about rising dividends in the future.View more earnings on FNDepending on the particular phase of a business cycle, some industries will perform better than others.Fabrinet Inc. has a lower PE than the aggregate PE of 79.84 of the Electronic Components industry. Ideally, one might believe that they might perform worse than its peers, but its also probable that the stock is undervalued.There are many limitations to price to earnings ratio. It is sometimes difficult to determine the nature of the earnings makeup of a company. Shareholders might not get what theyre looking for, from trailing earnings.See more from Benzinga Morning Market Stats in 5 Minutes Earnings Scheduled For August 17, 2020 Fabrinet Earnings PreviewC 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. 