Is There Now An Opportunity In Lumentum Holdings Inc. (NASDAQ:LITE)?

Lumentum Holdings Inc. (NASDAQ:LITE), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Lumentum Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Lumentum Holdings

What's The Opportunity In Lumentum Holdings?

Great news for investors – Lumentum Holdings is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $78.52, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Lumentum Holdings’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Lumentum Holdings look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted revenue growth of 1.2% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Lumentum Holdings, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since LITE is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on LITE for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy LITE. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that Lumentum Holdings has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Lumentum Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.