Lumentum Holdings (LITE) AI Stock Analysis

• Market Cap: $4.46B
• Dividend Yield: N/A
• Average Volume (3M): 2.73M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.61
• Revenue Growth: 3.58%
• EPS Growth: -22.74%
• Country: US
• Employees: 7,257
• Sector: Technology
• Sector Strength: 67
• Industry: Communication Equipment
• EPS (TTM): 0.57
• Shares Outstanding: 69,200,000
• 10 Day Avg. Volume: 1,913,159
• 30 Day Avg. Volume: 2,729,448
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.69
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 29.92
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $83.40
• Price Target Upside: 28.56% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

Lumentum Holdings' overall stock score reflects a mix of financial challenges and positive future growth prospects. The company's financial performance is a concern due to high debt and declining profitability. However, the technical indicators show some momentum, and the earnings call provides a positive outlook with strong growth in key segments. The valuation remains a downside due to the negative P/E ratio.

Positive Factors

Financial Performance

Lumentum reported better results and slightly better guidance largely driven by an upcoming inflection in transceiver shipments and continued hyperscaler customer momentum.

Market Position

LITE is seen as a share winner with the move to EMLs and expected growth in the transceiver business as the market seeks more US capacity.

Production Expansion

Plans for expanding production capacity in Thailand and winning new module customers are on track to drive strong future growth.

Negative Factors

Industrial Sector Challenges

Industrial Tech guidance of -$10 million QOQ decline was worse than prior expectations as demand for industrial lasers remains challenged.

Supply Chain Risks

Supply continues to be a gating factor with stretched cycle times and execution risks, while peers are aggressively expanding in an industry with relatively substitutable products.

Tariff Concerns

Tariffs extending beyond China into greater Southeast Asia would make LITE one of the hardest hit.

Lumentum Holdings Business Overview & Revenue Model

Company Description

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. It offers tunable transponders, transceivers, and transmitter modules; tunable lasers, receivers, and modulators; transport products, such as reconfigurable optical add/drop multiplexers, amplifiers, and optical channel monitors, as well as components, including 980nm, multi-mode, and Raman pumps; and switches, attenuators, photodetectors, gain flattening filters, isolators, wavelength-division multiplexing filters, arrayed waveguide gratings, multiplex/de-multiplexers, and integrated passive modules. This segment also provides Super Transport Blade, which integrates optical transport functions into a single-slot blade; vertical-cavity surface-emitting lasers; directly modulated and electro-absorption modulated lasers; and laser illumination sources for 3D sensing systems. It serves customers in telecommunications, data communications, and consumer and industrial markets. The Commercial Lasers segment offers diode-pumped solid-state, fiber, diode, direct-diode, and gas lasers for use in original equipment manufacturer applications. It serves customers in markets and applications, such as sheet metal processing, general manufacturing, biotechnology, graphics and imaging, remote sensing, and precision machining. Lumentum Holdings Inc. was incorporated in 2015 and is headquartered in San Jose, California.

How the Company Makes Money

Lumentum Holdings generates revenue primarily through the sale of its optical and photonic products to various sectors. The company's revenue model is centered around its key product lines, including Optical Communications and Commercial Lasers. In the Optical Communications segment, Lumentum earns money by providing components and modules used in telecommunications networks and data centers, such as reconfigurable optical add-drop multiplexers (ROADMs) and tunable transponders. In the Commercial Lasers segment, the company profits by supplying lasers used in precision manufacturing, 3D sensing, and other industrial applications. Lumentum's earnings are also bolstered by strategic partnerships and collaborations with major technology companies, which enable it to integrate its products into broader systems and solutions. Additionally, market trends such as increasing demand for higher bandwidth and connectivity are significant factors that contribute to the company's revenue growth.

Lumentum Holdings Financial Statement Overview

Summary

Lumentum Holdings faces significant financial challenges with declining revenue and profitability. The income statement shows negative profitability and deteriorating margins. The balance sheet reveals high leverage risks despite liquidity from cash reserves. Cash flow analysis suggests some resilience in cash generation, but volatility persists. Overall, the company must address operational inefficiencies and manage leverage to stabilize its position.

Income Statement

The income statement reveals negative profitability with a declining revenue trend in recent years. Gross profit margin has fallen sharply from approximately 45% in 2021 to around 18% in the TTM period. The net profit margin has turned negative, reflecting significant net losses. Revenue growth is negative, indicating challenges in maintaining sales momentum. The EBIT and EBITDA margins have also deteriorated, showing operational inefficiencies.

Balance Sheet

The balance sheet shows a relatively high debt-to-equity ratio of about 2.99 in the TTM period, indicating potential leverage risks. Stockholders' equity has decreased over recent periods, affecting the equity ratio, now at roughly 22%. However, the company maintains substantial cash reserves, which provides some liquidity buffer despite declining equity.

Cash Flow

Cash flow analysis indicates a decrease in operating cash flow, although the company has managed to generate positive free cash flow in the TTM period. The free cash flow to net income ratio is positive, highlighting cash generation capability despite net losses. However, the operating cash flow to net income ratio is less stable, reflecting volatility in cash earnings.

Breakdown
Jun 2024	Sep 2023	Sep 2022	Sep 2021	Jun 2020
Income Statement		Total Revenue
1.36B	1.77B	1.71B	1.74B	1.68B
	Gross Profit
251.50M	569.00M	788.60M	783.10M	650.20M
	EBIT
-434.00M	-115.70M	147.10M	152.90M	55.90M
	EBITDA
-110.70M	167.40M	482.40M	706.90M	419.40M
	Net Income Common Stockholders
-546.50M	-131.60M	198.90M	397.30M	135.50M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
887.00M	2.01B	2.55B	1.95B	1.55B
	Total Assets
3.93B	4.63B	4.16B	3.55B	3.29B
	Total Debt
2.56B	2.87B	1.94B	1.24B	1.19B
	Net Debt
2.12B	2.01B	645.80M	465.60M	890.70M
	Total Liabilities
2.97B	3.28B	2.29B	1.58B	1.54B
	Stockholders Equity
957.30M	1.36B	1.88B	1.97B	1.75B
Cash Flow		Free Cash Flow
-111.30M	51.30M	368.10M	653.90M	438.30M
	Operating Cash Flow
24.70M	179.80M	459.30M	738.70M	524.30M
	Investing Cash Flow
-114.30M	-874.00M	-226.30M	1.00M	-987.70M
	Financing Cash Flow
-332.70M	263.00M	282.90M	-263.40M	328.80M

Lumentum Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 64.87
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LITE, the sentiment is Positive. The current price of 64.87 is above the 20-day moving average (MA) of 57.68, above the 50-day MA of 61.09, and below the 200-day MA of 68.89, indicating a neutral trend. The MACD of 1.23 indicates Negative momentum. The RSI at 60.14 is Neutral, neither overbought nor oversold. The STOCH value of 89.17 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LITE.

Lumentum Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIEN	68 Neutral	$10.33B	134.61	2.76%	―	-7.29%	-64.31%
PI	63 Neutral	$2.80B	58.72	-0.78%	―	21.80%	89.21%
EXTR	61 Neutral	$1.89B	―	-78.83%	―	-11.00%	-792.47%
Sector *	60 Neutral	$10.94B	10.37	-6.73%	2.98%	7.75%	-12.61%
VIAV	60 Neutral	$2.01B	428.10	0.71%	―	3.34%	―
LITE	59 Neutral	$4.46B	―	-42.79%	―	3.58%	-22.74%
ADTN	43 Neutral	$619.71M	―	-66.50%	―	-10.18%	75.45%

Lumentum Holdings Corporate Events

Lumentum Holdings Appoints New CEO Amid Leadership Transition

On February 3, 2025, Lumentum Holdings announced a leadership transition with Michael Hurlston appointed as the new President and CEO, succeeding Alan Lowe effective February 7, 2025. Hurlston, who brings over 30 years of experience from Synaptics and Finisar, is expected to drive the company’s growth in the cloud and AI photonics market. The company also provided preliminary financial results for the fiscal second quarter of 2025, projecting net revenue of approximately $402 million, which is at the high end of their previous guidance.