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LITE

Lumentum Holdings NasdaqGS:LITE Stock Report

Last Price

US$92.19

Market Cap

US$6.4b

7D

1.7%

1Y

14.3%

Updated

08 Aug, 2022

Data

Company Financials +
LITE fundamental analysis
Snowflake Score
Valuation2/6
Future Growth5/6
Past Performance2/6
Financial Health5/6
Dividends0/6

LITE Stock Overview

Lumentum Holdings Inc. manufactures and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa.

Lumentum Holdings Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Lumentum Holdings
Historical stock prices
Current Share PriceUS$92.19
52 Week HighUS$108.90
52 Week LowUS$73.97
Beta0.93
1 Month Change15.04%
3 Month Change3.20%
1 Year Change14.31%
3 Year Change60.14%
5 Year Change70.41%
Change since IPO442.29%

Recent News & Updates

Jul 25
At US$85.02, Is Lumentum Holdings Inc. (NASDAQ:LITE) Worth Looking At Closely?

At US$85.02, Is Lumentum Holdings Inc. (NASDAQ:LITE) Worth Looking At Closely?

Lumentum Holdings Inc. ( NASDAQ:LITE ), is not the largest company out there, but it saw a double-digit share price...

Jul 19

Lumentum: Even With Some Risks, FCF Will Likely Push The Price Up

Lumentum Holdings Inc. provides optical and photonic products for optical communications and commercial lasers for manufacturing, inspection, and life-science applications. The growing demand for Lumentum’s products will likely bring Lumentum’s revenue growth up. Automobiles, machine vision, biometric security, LiDAR, and driver monitoring are some of the new technologies. A simple discounted cash flow model with assumptions close to that of management reveals that the company is significantly undervalued by the market. Lumentum Holdings Inc. (LITE) is expected to benefit from investments in capital expenditures in the telecom industry. The need for faster communication is increasing with the emergence of many new industries. As a result, from now until 2030, LITE may find more and more demand for its products. There are some risks coming from lack of suppliers, client concentration, or failed M&A transactions. However, the current price mark fails to recognize the future stream of free cash flow. Lumentum Lumentum Holdings Inc. provides optical and photonic products for optical communications and commercial lasers for manufacturing, inspection, and life-science applications. After checking some of the expectations for the year 2022, I became quite interested in Lumentum's business model. Management believes that the US federal stimulus, capex from internet content providers, and service providers will likely accelerate demand for Lumentum's products. Investor Presentation Estimates from Lumentum include a long list of products. The growing demand for Lumentum's products will likely bring Lumentum's revenue growth up. Automobiles, machine vision, biometric security, LiDAR, and driver monitoring are some of the new technologies to which Lumentum contributes. Investor Presentation With the previous revenue growth catalysts, management expects double-digit sales growth in 2023 and beyond. The target stands close to 10% sales growth, 50% gross margin, and operating margin close to 30%-31%. Investor Presentation Investor Presentation Balance Sheet: The Convertible Debt May Not Be Appreciated By Certain Investors As of April 2, 2022, Lumentum reported $1.13 billion and $1.4 billion in short-term investments. The asset/liability ratio is close to 2x, so I believe that the company's financial situation appears stable. 10-Q Lumentum reports current convertible debt worth $406 million, and non-current convertible debt worth $1.44 billion. Certain investors don't like convertible debt, so I decided to include certain features about the debt. Keep in mind that conversion of debt could lead to an increase in the share count, which may lower the intrinsic valuation of the stock. The 2026 Notes bear interest at a rate of 0.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2020. The initial conversion rate is 10.0711 shares of common stock per $1,000 principal amount of the 2026 Notes. Source: 10-K 10-Q With that, about the convertible debt, let's note that the company's contractual obligations don't seem very significant until about five years. In my view, Lumentum has a lot of time to build valuable assets, and pay its debts. 10-K The Fair Price Could Stand Close To $164 Per Share Under normal circumstances, Lumentum will likely benefit from the increase in needs for higher data transmission speeds. With larger data centers around the world and new industries demanding fast communications, Lumentum's products will likely find more demand. As a result, I expect revenue growth and free cash flow growth from now to 2030. The OpComms markets we serve are experiencing continually increasing needs for higher data transmission speeds, fiber optic network capacity and network agility. This is driven by rapid growth in both the number of higher bandwidth broadband applications such as high-definition video, online gaming, cloud computing and the number and scale of datacenters that require fiber optic links to enable the higher speeds and increased scale necessary to deliver high bandwidth video and other services. Source: 10-K I also assumed that Lumentum will likely continue to offer innovative technology thanks to scalable manufacturing and operations along with more partners. Considering that massive clients do work with the company, others may also be interested in Lumentum's new technological innovations: In our OpComms segment, we are focused on technology leadership through innovation with our customers, cost leadership and functional integration. We endeavor to align the latest technologies with industry leading, scalable manufacturing and operations to drive the next phase of optical communications technologies and products for Telecom and Datacom applications that are faster, more energy efficient, more agile and more reliable, making us a valuable business and technology partner for NEMs, consumer electronic companies, cloud service providers and data center operators. Source: 10-K 10-K Under my discounted cash flow model, I used sales growth of 10% from 2022 to 2030, an EBITDA margin of 36%, and an operating margin of 31%. With these assumptions, which are close to that given by management, 2030 NOPAT would stand at $941 million. Lubo I also included growing D&A from $85 million to $195 million and change in working capital/sales of 2%. Finally, with capex/sales close to 5%-2%, my resulting free cash flow would grow from $402 million in 2022 to $1 billion in 2030.

May 27

Lumentum: Because Lasers Have A Bright Future

During the technology sell-off, Lumentum has not only been outperforming the technology sector, but is also outperforming the S&P 500. The reason is because the company has a competitive advantage when it comes to its laser-based 3D-sensing and optical networking solutions. Meantime, LITE is using the $217.6 million termination fee from Coherent to help fund its $918 million acquisition of NeoPhotonics. While near-term headwinds have damped down LITE's growth, longer-term the company is well positioned to prosper in the large and fast growing optical component/networking market.

Shareholder Returns

LITEUS CommunicationsUS Market
7D1.7%0.6%1.1%
1Y14.3%-12.3%-13.0%

Return vs Industry: LITE exceeded the US Communications industry which returned -12.3% over the past year.

Return vs Market: LITE exceeded the US Market which returned -12.9% over the past year.

Price Volatility

Is LITE's price volatile compared to industry and market?
LITE volatility
LITE Average Weekly Movement5.2%
Communications Industry Average Movement8.3%
Market Average Movement7.9%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.2%

Stable Share Price: LITE is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: LITE's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
20155,618Alan Lowehttps://www.lumentum.com

Lumentum Holdings Inc. manufactures and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company operates in two segments, Optical Communications (OpComms) and Commercial Lasers (Lasers). The OpComms segment offers components, modules, and subsystems that enable the transmission and transport of video, audio, and data over high-capacity fiber optic cables.

Lumentum Holdings Fundamentals Summary

How do Lumentum Holdings's earnings and revenue compare to its market cap?
LITE fundamental statistics
Market CapUS$6.36b
Earnings (TTM)US$185.70m
Revenue (TTM)US$1.68b

34.3x

P/E Ratio

3.8x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
LITE income statement (TTM)
RevenueUS$1.68b
Cost of RevenueUS$862.00m
Gross ProfitUS$820.60m
Other ExpensesUS$634.90m
EarningsUS$185.70m

Last Reported Earnings

Apr 02, 2022

Next Earnings Date

Aug 16, 2022

Earnings per share (EPS)2.69
Gross Margin48.77%
Net Profit Margin11.04%
Debt/Equity Ratio96.9%

How did LITE perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is LITE undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for LITE?

Other financial metrics that can be useful for relative valuation.

LITE key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue3.4x
Enterprise Value/EBITDA12.6x
PEG Ratio1.2x

Price to Earnings Ratio vs Peers

How does LITE's PE Ratio compare to its peers?

LITE PE Ratio vs Peers
The above table shows the PE ratio for LITE vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average22.2x
CIEN Ciena
18.4x20.6%US$7.9b
JNPR Juniper Networks
23.2x9.8%US$9.1b
FFIV F5
29.6x23.3%US$10.2b
CALX Calix
17.6x-73.3%US$3.7b
LITE Lumentum Holdings
34.3x29.3%US$6.4b

Price-To-Earnings vs Peers: LITE is expensive based on its Price-To-Earnings Ratio (34.3x) compared to the peer average (22.2x).


Price to Earnings Ratio vs Industry

How does LITE's PE Ratio compare vs other companies in the US Communications Industry?

Price-To-Earnings vs Industry: LITE is expensive based on its Price-To-Earnings Ratio (34.3x) compared to the US Communications industry average (21.9x)


Price to Earnings Ratio vs Fair Ratio

What is LITE's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

LITE PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio34.3x
Fair PE Ratio28.9x

Price-To-Earnings vs Fair Ratio: LITE is expensive based on its Price-To-Earnings Ratio (34.3x) compared to the estimated Fair Price-To-Earnings Ratio (28.9x).


Share Price vs Fair Value

What is the Fair Price of LITE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LITE ($92.19) is trading below our estimate of fair value ($229.14)

Significantly Below Fair Value: LITE is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Lumentum Holdings forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


29.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LITE's forecast earnings growth (29.3% per year) is above the savings rate (1.9%).

Earnings vs Market: LITE's earnings (29.3% per year) are forecast to grow faster than the US market (12.8% per year).

High Growth Earnings: LITE's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: LITE's revenue (12.7% per year) is forecast to grow faster than the US market (8% per year).

High Growth Revenue: LITE's revenue (12.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LITE's Return on Equity is forecast to be high in 3 years time (23.1%)


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Past Performance

How has Lumentum Holdings performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


42.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LITE has high quality earnings.

Growing Profit Margin: LITE's current net profit margins (11%) are lower than last year (21.5%).


Past Earnings Growth Analysis

Earnings Trend: LITE has become profitable over the past 5 years, growing earnings by 42% per year.

Accelerating Growth: LITE's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: LITE had negative earnings growth (-49.7%) over the past year, making it difficult to compare to the Communications industry average (42.1%).


Return on Equity

High ROE: LITE's Return on Equity (9.7%) is considered low.


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Financial Health

How is Lumentum Holdings's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: LITE's short term assets ($3.1B) exceed its short term liabilities ($660.7M).

Long Term Liabilities: LITE's short term assets ($3.1B) exceed its long term liabilities ($1.6B).


Debt to Equity History and Analysis

Debt Level: LITE has more cash than its total debt.

Reducing Debt: LITE's debt to equity ratio has increased from 43.6% to 96.9% over the past 5 years.

Debt Coverage: LITE's debt is well covered by operating cash flow (25.3%).

Interest Coverage: LITE's interest payments on its debt are well covered by EBIT (4.2x coverage).


Balance Sheet


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Dividend

What is Lumentum Holdings's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate LITE's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate LITE's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if LITE's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if LITE's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as LITE has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

4.2yrs

Average management tenure


CEO

Alan Lowe (60 yo)

7.08yrs

Tenure

US$10,299,689

Compensation

Mr. Alan S. Lowe has been the Chief Executive Officer and President of Lumentum Holdings Inc. since July 2015. Mr. Lowe is experienced in general management, operations, sales and business development. He...


CEO Compensation Analysis

Compensation vs Market: Alan's total compensation ($USD10.30M) is about average for companies of similar size in the US market ($USD8.35M).

Compensation vs Earnings: Alan's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: LITE's management team is considered experienced (4.2 years average tenure).


Board Members

Experienced Board: LITE's board of directors are considered experienced (5.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Lumentum Holdings Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Lumentum Holdings Inc.
  • Ticker: LITE
  • Exchange: NasdaqGS
  • Founded: 2015
  • Industry: Communications Equipment
  • Sector: Tech
  • Implied Market Cap: US$6.361b
  • Shares outstanding: 69.00m
  • Website: https://www.lumentum.com

Number of Employees


Location

  • Lumentum Holdings Inc.
  • 1001 Ridder Park Drive
  • San Jose
  • California
  • 95131
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/08 00:00
End of Day Share Price2022/08/08 00:00
Earnings2022/04/02
Annual Earnings2021/07/03


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.