Lumentum Holdings (LITE): Assessing Valuation After a 1-Year Shareholder Return of 131.9%

Lumentum Holdings (LITE) stock has had a mixed run lately, with recent returns showing both gains and small dips from month to month. Investors are keeping a close eye on the company’s growth trajectory and valuation trends.

See our latest analysis for Lumentum Holdings.

Lumentum Holdings has seen the momentum really build over recent months, with a 63.6% 90-day share price return fueling an impressive 87.6% gain so far this year. The stock has also posted a standout 1-year total shareholder return of 131.9%. That surge has helped put some earlier stumbles firmly in the rear-view mirror, giving the stock fresh energy and drawing renewed attention from both growth-focused and value-oriented investors.

If Lumentum’s recent run has you wondering what else is on the move, it might be the perfect time to discover fast growing stocks with high insider ownership

With shares soaring over the past year, the key question now is whether Lumentum Holdings remains attractively priced or if the stock’s current valuation already reflects all anticipated growth. This could mean there is little room for a bargain opportunity.

Most Popular Narrative: 9.9% Overvalued

Compared to Lumentum Holdings' last close price, the most popular narrative assesses fair value at $146.16, which is below the current market level. This sets up a tension between market enthusiasm and the valuation analysts believe is justified right now.

Early and accelerating customer adoption of next-generation modules (cloud modules, 200G+ EMLs), optical circuit switches, and co-packaged optics, backed by record orders and a growing hyperscaler customer base, provide clear, additive revenue streams that are projected to materially increase total revenue and expand earnings over the next 12-18 months.

Read the complete narrative.

What’s fueling all this optimism? Analysts are working with aggressive growth runway projections and future profit expectations often reserved for sector leaders. Want to glimpse the bold assumptions driving this high fair value and how they stack up against recent momentum? The full narrative pulls back the curtain on these key numbers and the logic behind them.

Result: Fair Value of $146.16 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain, as execution depends on sustained demand from a small set of key customers and on maintaining margins in an increasingly competitive sector.

Find out about the key risks to this Lumentum Holdings narrative.

Another View: SWS DCF Perspective

Looking at Lumentum Holdings from the perspective of our DCF model, the story shifts. The SWS DCF model suggests the shares are actually undervalued by about 4.4%, with a fair value near $168.03 compared to the recent price of $160.56. This presents an interesting split: are current market worries about risk overshadowing genuine long-term potential?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lumentum Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Lumentum Holdings Narrative

If you’d rather form your own conclusions or want to dig deeper than the numbers here, the tools are at your fingertips. You can craft your own analysis in just a few minutes — Do it your way

A great starting point for your Lumentum Holdings research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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