NasdaqCM:LUNA

Stock Analysis Report

Executive Summary

Luna Innovations Incorporated develops, manufactures, and markets fiber optic sensing, and test and measurement products worldwide.

Rewards

Trading at 79.3% below its fair value

Revenue is forecast to grow 15.87% per year

Earnings grew by 142.2% over the past year

Risk Analysis

Highly volatile share price over past 3 months

Large one-off items impacting financial results



Snowflake Analysis

Flawless balance sheet with proven track record.

Share Price & News

How has Luna Innovations's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: LUNA's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0.5%

LUNA

-0.5%

US Electronic

-0.09%

US Market


1 Year Return

149.0%

LUNA

26.7%

US Electronic

23.9%

US Market

Return vs Industry: LUNA exceeded the US Electronic industry which returned 30.2% over the past year.

Return vs Market: LUNA exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

LUNAIndustryMarket
7 Day0.5%-0.5%-0.09%
30 Day15.5%2.4%3.1%
90 Day43.9%9.0%10.4%
1 Year149.0%149.0%28.0%26.7%26.6%23.9%
3 Year335.4%335.4%49.7%45.5%50.9%41.2%
5 Year405.1%405.1%88.9%79.4%78.1%58.5%

Price Volatility Vs. Market

How volatile is Luna Innovations's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Luna Innovations undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LUNA ($8.04) is trading below our estimate of fair value ($38.75)

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


Price To Earnings Ratio

PE vs Industry: LUNA is poor value based on its PE Ratio (82.9x) compared to the Electronic industry average (21.2x).

PE vs Market: LUNA is poor value based on its PE Ratio (82.9x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate LUNA's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: LUNA is overvalued based on its PB Ratio (3.7x) compared to the US Electronic industry average (2.1x).


Next Steps

Future Growth

How is Luna Innovations forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

15.9%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if LUNA's forecast earnings growth is above the savings rate (1.7%).

Earnings vs Market: Insufficient data to determine if LUNA's earnings are forecast to grow faster than the US market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: LUNA's revenue (15.9% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: LUNA's revenue (15.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if LUNA's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Luna Innovations performed over the past 5 years?

59.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LUNA has a large one-off loss of $1.7M impacting its September 30 2019 financial results.

Growing Profit Margin: LUNA's current net profit margins (4.2%) are higher than last year (2.9%).


Past Earnings Growth Analysis

Earnings Trend: LUNA has become profitable over the past 5 years, growing earnings by 59% per year.

Accelerating Growth: LUNA's earnings growth over the past year (142.2%) exceeds its 5-year average (59% per year).

Earnings vs Industry: LUNA earnings growth over the past year (142.2%) exceeded the Electronic industry 53.6%.


Return on Equity

High ROE: LUNA's Return on Equity (4.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Luna Innovations's financial position?


Financial Position Analysis

Short Term Liabilities: LUNA's short term assets ($54.9M) exceed its short term liabilities ($15.7M).

Long Term Liabilities: LUNA's short term assets ($54.9M) exceed its long term liabilities ($2.3M).


Debt to Equity History and Analysis

Debt Level: LUNA is debt free.

Reducing Debt: LUNA has no debt compared to 5 years ago when its debt to equity ratio was 5.1%.

Debt Coverage: LUNA has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: LUNA has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: LUNA has a low level of unsold assets or inventory.

Debt Coverage by Assets: LUNA's debt is covered by short term assets (assets are 1.2366371616762E+17x debt).


Next Steps

Dividend

What is Luna Innovations's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.5%forecastin3Yearsn/a

Current dividend yield vs market & industry

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

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


Stability and Growth of Payments

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

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


Current Payout to Shareholders

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


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of LUNA's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Luna Innovations's salary, the management and board of directors tenure and is there insider trading?

1.2yrs

Average management tenure


CEO

Scott Graeff (52yo)

2.3yrs

Tenure

US$997,245

Compensation

Mr. Scott A. Graeff has been President and Chief Executive Officer of Luna Innovations Incorporated since October 23, 2017 and served as its Principal Operating Officer . Mr. Graeff served as the Chief Str ...


CEO Compensation Analysis

Compensation vs Market: Scott's total compensation ($USD997.25K) is about average for companies of similar size in the US market ($USD1.08M).

Compensation vs Earnings: Scott's compensation has increased by more than 20% in the past year.


Management Age and Tenure

1.2yrs

Average Tenure

53yo

Average Age

Experienced Management: LUNA's management team is not considered experienced ( 1.2 years average tenure), which suggests a new team.


Board Age and Tenure

3.7yrs

Average Tenure

71yo

Average Age

Experienced Board: LUNA's board of directors are considered experienced (3.7 years average tenure).


Insider Trading

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


Recent Insider Transactions

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Max PriceUS$5.02

Ownership Breakdown

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


Management Team

  • Dale Messick (55yo)

    Executive Officer

    • Tenure: 0.08yrs
    • Compensation: US$558.20k
  • Scott Graeff (52yo)

    President

    • Tenure: 2.3yrs
    • Compensation: US$997.25k
  • Brian Soller (46yo)

    VP & GM of Lightwave Division

    • Tenure: 5.8yrs
  • Allison Woody

    Director of Administration

    • Gene Nestro (54yo)

      CFO, Principal Financial Officer & Principal Accounting Officer

      • Tenure: 0.08yrs

    Board Members

    • Jerre Stead (76yo)

      Member of Advisory Board

      • Barry Phelps (72yo)

        Independent Director

        • Tenure: 2.7yrs
        • Compensation: US$56.00k
      • Jack Marsh (92yo)

        Member of Advisory Board

        • Rich Roedel (70yo)

          Independent Chairman of the Board

          • Tenure: 10yrs
          • Compensation: US$103.00k
        • Don Pastor (65yo)

          Independent Director

          • Tenure: 4.7yrs
          • Compensation: US$63.00k
        • Scott Graeff (52yo)

          President

          • Tenure: 2.3yrs
          • Compensation: US$997.25k
        • G. Wincup

          Member of Advisory Board

          • John Noftsinger

            Member of Advisory Board

            • Harold Kroto

              Member of Advisory Board

              • Charles Hamner

                Member of Advisory Board

                Company Information

                Luna Innovations Incorporated's company bio, employee growth, exchange listings and data sources


                Key Information

                • Name: Luna Innovations Incorporated
                • Ticker: LUNA
                • Exchange: NasdaqCM
                • Founded: 1990
                • Industry: Electronic Equipment and Instruments
                • Sector: Tech
                • Market Cap: US$256.107m
                • Shares outstanding: 30.17m
                • Website: https://www.lunainc.com

                Number of Employees


                Location

                • Luna Innovations Incorporated
                • 301 1st Street, SW
                • Suite 200
                • Roanoke
                • Virginia
                • 24011
                • United States

                Listings

                TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
                LUNANasdaqCM (Nasdaq Capital Market)YesCommon StockUSUSDJun 2006

                Biography

                Luna Innovations Incorporated develops, manufactures, and markets fiber optic sensing, and test and measurement products worldwide. It operates in two segments, Products and Licensing, and Technology Development. The Products and Licensing segment offers test and measurement products, which include optical vector analyzer, optical backscatter reflectometers, and the Phoenix family of tunable lasers; optical distributed sensor interrogator sensing solutions for distributed strain and temperature measurements; and Hyperion sensing solution that enable full-spectrum data acquisition and flexible peak detect algorithms of fiber-bragg grating (FBG), long period FBGs and fabry-perot sensors with low-latency access to data for closed loop feedback applications. This segment also provides general photonics comprising components, modules, and instruments to measure, manage, and control polarization and group delay in fiber optic networks; tunable lasers; and TeraMetrix products to measure and verify physical properties online and in real-time to reduce raw materials and rework costs in manufacturing processes as well as to conduct quality control monitoring utilizing terahertz measurement technologies. The Technology Development segment provides applied research for customers principally in the areas of sensing and instrumentation, advanced materials, and health sciences. The company sells its products to telecommunications companies, defense agencies, government system integrators, researchers, original equipment manufacturers, distributors, testing labs, and strategic partners directly, as well as through manufacturer representative organizations, partner and distribution channels, technical sales engineers, value added resellers, and independent sales representatives. Luna Innovations Incorporated was founded in 1990 and is headquartered in Roanoke, Virginia. 


                Company Analysis and Financial Data Status

                All financial data provided by Standard & Poor's Capital IQ.
                DataLast Updated (UTC time)
                Company Analysis2020/01/24 00:02
                End of Day Share Price2020/01/23 00:00
                Earnings2019/09/30
                Annual Earnings2018/12/31


                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.