Stock Analysis

Investors in Lumentum Holdings (NASDAQ:LITE) have made a respectable return of 33% over the past three years

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Lumentum Holdings Inc. (NASDAQ:LITE) shareholders have seen the share price descend 18% over the month. But that shouldn't obscure the pleasing returns achieved by shareholders over the last three years. To wit, the share price did better than an index fund, climbing 33% during that period.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

However if you'd rather see where the opportunities and risks are within LITE's industry, you can check out our analysis on the US Communications industry.

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During three years of share price growth, Lumentum Holdings moved from a loss to profitability. That would generally be considered a positive, so we'd expect the share price to be up.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

NasdaqGS:LITE Earnings Per Share Growth October 1st 2022

It is of course excellent to see how Lumentum Holdings has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Lumentum Holdings' financial health with this free report on its balance sheet.

A Different Perspective

While it's never nice to take a loss, Lumentum Holdings shareholders can take comfort that their trailing twelve month loss of 20% wasn't as bad as the market loss of around 22%. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Lumentum Holdings better, we need to consider many other factors. Take risks, for example - Lumentum Holdings has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

What are the risks and opportunities for Lumentum Holdings?

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

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  • Trading at 38.2% below our estimate of its fair value

  • Earnings are forecast to grow 4.97% per year


  • Debt is not well covered by operating cash flow

  • Profit margins (6.6%) are lower than last year (23.7%)

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Share Price

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About NasdaqGS:LITE

Lumentum Holdings

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

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth3
Past Performance2
Financial Health3

Read more about these checks in the individual report sections or in our analysis model.

Good value with moderate growth potential.