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Lumentum Holdings (LITE)
NASDAQ:LITE
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Lumentum Holdings
(NASDAQ:LITE)
50Neutral
Positive Factors
Earnings
LITE delivered a strong performance with revenue and EPS exceeding consensus expectations.
Market Opportunities
Higher U.S. tariffs on China present an opportunity for LITE to gain significant market share in Datacom XCVRs.
Negative Factors
Leadership Changes
Unexpected CEO transition at a critical time as LITE attempts to scale multiple businesses simultaneously, creating cautious sentiment post-transition announcement.
Lumentum Holdings (LITE) vs. S&P 500 (SPY)
Market Cap
$4.29B
Dividend YieldN/A
Average Volume (3M)2.88M
Price to Earnings (P/E)―
Beta (1Y)2.77
Revenue Growth-1.72%
EPS Growth-94.98%
CountryUS
Employees7,257
SectorTechnology
Sector Strength54
IndustryHardware & Equipment
Share Statistics
EPS (TTM)-7.70
Shares Outstanding69,200,000
10 Day Avg. Volume3,163,632
30 Day Avg. Volume2,876,294
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.04
Price to Cash Flow (P/CF)44.20
P/FCF Ratio44.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$96.85Price Target Upside60.64% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Lumentum Holdings Business Overview & Revenue Model
Company DescriptionLumentum Holdings, Inc. engages in the provision of optical and photonic products. It operates through the Optical Communications (OpComms) and Commercial Lasers segments. The OpComms segment includes a range of components, modules, and subsystems to support customers including carrier networks of access (local), metro (intracity), long-haul (city-to-city and worldwide), and submarine (undersea) applications. The Commercial Lasers segment focuses in serving customers in markets and applications such as sheet metal processing, general manufacturing, biotechnology, graphics and imaging, remote sensing, and precision machining such as drilling in printed circuit boards, wafer singulation, glass cutting, and solar cell scribing. The company was founded on February 10, 2015 and is headquartered in Milpitas, CA.
How the Company Makes MoneyLumentum 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. While cash reserves provide some liquidity, the high debt levels pose a risk. Operational inefficiencies are evident from negative EBIT and EBITDA margins. Overall, the company must focus on improving operational performance and managing leverage to stabilize its financial 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.45
Neutral
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.50
Neutral
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.55
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.41B | 1.36B | 1.77B | 1.71B | 1.74B | 1.68B | Gross Profit |
| 251.10M | 251.50M | 569.00M | 788.60M | 783.10M | 650.20M | EBIT |
| -323.80M | -434.00M | -115.70M | 147.10M | 152.90M | 55.90M | EBITDA |
| -56.60M | -110.70M | 167.40M | 482.40M | 706.90M | 419.40M | Net Income Common Stockholders |
| -522.80M | -546.50M | -131.60M | 198.90M | 397.30M | 135.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 896.70M | 887.00M | 2.01B | 2.55B | 1.95B | 1.55B | Total Assets |
| 3.97B | 3.93B | 4.63B | 4.16B | 3.55B | 3.29B | Total Debt |
| 2.61B | 2.56B | 2.87B | 1.94B | 1.24B | 1.19B | Net Debt |
| 2.13B | 2.12B | 2.01B | 645.80M | 465.60M | 890.70M | Total Liabilities |
| 3.09B | 2.97B | 3.28B | 2.29B | 1.58B | 1.54B | Stockholders Equity |
| 872.30M | 957.30M | 1.36B | 1.88B | 1.97B | 1.75B |
| Cash Flow | Free Cash Flow | ||||
| 51.20M | -111.30M | 51.30M | 368.10M | 653.90M | 438.30M | Operating Cash Flow |
| 92.40M | 24.70M | 179.80M | 459.30M | 738.70M | 524.30M | Investing Cash Flow |
| 185.00M | -114.30M | -874.00M | -226.30M | 1.00M | -987.70M | Financing Cash Flow |
| -267.00M | -332.70M | 263.00M | 282.90M | -263.40M | 328.80M |
Lumentum Holdings Technical Analysis
Negative
60.29
Price Trends
79.69
Negative
80.01
Negative
66.95
Negative
Market Momentum
-5.69
Positive
35.64
Neutral
37.07
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LITE, the sentiment is Negative. The current price of 60.29 is below the 20-day moving average (MA) of 69.17, below the 50-day MA of 79.69, and below the 200-day MA of 66.95, indicating a bearish trend. The MACD of -5.69 indicates Positive momentum. The RSI at 35.64 is Neutral, neither overbought nor oversold. The STOCH value of 37.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LITE.
Lumentum Holdings Risk Analysis
Lumentum Holdings disclosed 45 risk factors in its most recent earnings report. Lumentum Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Lumentum Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
64 Neutral | $7.95B | 138.48 | -9.49% | ― | 26.40% | -234.22% | |
60 Neutral | $2.40B | ― | -5.53% | ― | -0.67% | -856.71% | |
58 Neutral | $21.67B | 10.04 | -18.58% | 2.39% | 5.01% | -23.17% | |
53 Neutral | $10.30B | ― | 0.88% | ― | 14.61% | 85.44% | |
52 Neutral | $2.50B | ― | -8.18% | ― | -24.10% | -189.99% | |
50 Neutral | $4.29B | ― | -48.63% | ― | -1.72% | -94.98% | |
47 Neutral | $751.26M | ― | -84.12% | ― | 14.57% | -139.27% |
* Technology Sector Average
Performance Comparison
LITE
Lumentum Holdings
60.29
14.04
30.36%
COHR
Coherent Corp
62.40
2.67
4.47%
IPGP
IPG Photonics
59.51
-27.53
-31.63%
MTSI
MACOM Technology Solutions Holdings
104.21
14.28
15.88%
AAOI
Applied Optoelectronics
15.87
2.95
22.83%
VIAV
Viavi Solutions
10.79
0.83
8.33%
Lumentum Holdings Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -34.94% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performance and growth in the Cloud and Networking segment, driven by robust demand and innovative product development. However, supply chain constraints and challenges in the Industrial Tech segment tempered the overall positive sentiment. The company is making strategic investments in capacity expansion to address these issues.Highlights
Exceeding Financial Guidance
Second quarter revenue of $402.2 million and non-GAAP EPS of $0.42 exceeded the high end of guidance ranges. Cloud and Networking segment revenue grew 20% sequentially and 18% year-over-year.
Strong Cloud and Networking Growth
Datacom transceiver revenue increased due to higher shipments to a major cloud hyperscale customer and the start of volume production with a new customer. Engagements with cloud customers and AI infrastructure providers reached an all-time high.
Innovative Product Development
Lumentum began shipping new 200G lane speed EMLs and ultra-high power lasers for AI infrastructure, driving future growth opportunities.
Operational and Strategic Achievements
Transceiver manufacturing capacity expansion is progressing as planned, with significant infrastructure developments at the Thailand site.
Lowlights
Supply Chain Constraints
Supply chain shortages, particularly in critical components like hermetic packages, are limiting growth potential in the Cloud and Networking segment.
Industrial Tech Segment Challenges
Industrial Tech segment revenue was down 21% year-over-year, with weak industrial end market demand affecting performance.
Gross Margin Pressures
Second quarter non-GAAP gross margin was slightly down sequentially due to initial ramp-up yield issues and underutilization of new infrastructure.
Company Guidance
In the second quarter of fiscal year 2025, Lumentum Holdings surpassed the top end of their guidance range, achieving revenues of $402.2 million and a non-GAAP earnings per share of $0.42. The Cloud and Networking segment saw a significant 20% sequential growth and an 18% year-over-year increase, driven primarily by strong demand from cloud hyperscale customers and improving networking markets. The company reported a non-GAAP gross margin of 32.3% and a non-GAAP operating margin of 7.9%, indicating a sequential increase of 490 basis points. Lumentum is on track to achieve its goal of reaching $500 million in quarterly revenue by the end of calendar year 2025, fueled by strategic capacity expansions and new customer acquisitions in the cloud and AI markets. For the third quarter, the company has projected revenues between $410 million and $425 million, with expectations for continuing growth in Cloud and Networking, despite some supply chain challenges. The Industrial Tech segment, however, is anticipated to experience a sequential decline due to macroeconomic challenges and seasonal factors.Lumentum Holdings Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Lumentum Holdings Appoints New CEO Amid Leadership Transition
Positive
Feb 3, 2025
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.