Lumentum Holdings Inc (LITE, Financial) has recently caught the attention of investors with its notable stock performance. The company's market capitalization stands at $3.65 billion, with a current price of $54.43. Over the past week, LITE has experienced a 3.29% gain, and looking at the past three months, the stock has surged by an impressive 10.47%. Despite these gains, GuruFocus's valuation metric, the GF Value, suggests caution with a current assessment of "Possible Value Trap, Think Twice," a sentiment that has remained unchanged from the past GF Value of $93.85.
Introduction to Lumentum Holdings Inc
Lumentum Holdings Inc, operating within the hardware industry, is a provider of innovative optical and photonic products. These products are essential in a variety of applications, from telecommunications networking equipment to commercial lasers used in manufacturing, inspection, and life-science applications. The company is divided into two segments: OpComms and Lasers, with the former being the primary revenue generator. Lumentum is also venturing into new optical applications, such as 3-D sensing laser diodes for consumer electronics. This strategic expansion positions the company to capitalize on emerging technological trends.
Assessing Profitability
Lumentum's Profitability Rank stands at 6/10, indicating a moderate level of profitability within its industry. The company's Operating Margin is currently at -11.42%, which, while negative, fares better than 18.62% of 2,454 companies in the same sector. Its ROE is -13.68%, ROA at -4.46%, and ROIC at -7.98%, each outperforming a significant portion of its industry peers. Over the past decade, Lumentum has maintained profitability for six years, which is better than 37.62% of 2,318 companies in the hardware industry.
Growth Prospects of Lumentum
The company's Growth Rank is an impressive 8/10, reflecting strong growth potential. Lumentum's 3-Year Revenue Growth Rate per Share is 6.10%, and its 5-Year Revenue Growth Rate per Share is 4.40%, both surpassing over half of the companies in the industry. The Total Revenue Growth Rate (Future 3Y To 5Y Est) is estimated at a modest 0.27%. However, the company shines in its EPS growth, with a 3-Year EPS without NRI Growth Rate of 34.20% and a 5-Year Rate of 55.80%, outperforming the majority of its peers.
Notable Shareholders
Among Lumentum's notable shareholders, Ken Fisher (Trades, Portfolio) holds 672,991 shares, representing a 1% stake in the company. Jim Simons (Trades, Portfolio) follows with 553,200 shares, accounting for 0.83%, and Steven Cohen (Trades, Portfolio) holds 126,724 shares, which equates to a 0.19% share percentage. These prominent investors' involvement may signal confidence in Lumentum's market position and future prospects.
Competitive Landscape
Lumentum operates in a competitive industry, with key players such as Extreme Networks Inc (EXTR, Financial) with a market cap of $2.36 billion, Belden Inc (BDC, Financial) at $3.26 billion, and Viasat Inc (VSAT, Financial) closely trailing at $3.37 billion. These companies represent the competitive environment in which Lumentum must innovate and grow to maintain its market position.
Conclusion
In summary, Lumentum Holdings Inc has demonstrated a strong stock performance with a 10.47% gain over the past three months. The company's profitability, while not without its challenges, compares favorably within the industry. Growth prospects appear robust, particularly in terms of EPS growth. However, the current GF Valuation suggests that investors should exercise caution. The GF Value, as defined by GuruFocus.com, calculates a stock's intrinsic value using historical multiples, past performance adjustments, and future business estimates, and currently indicates that Lumentum may be a possible value trap. Investors should consider the company's financial health and market position, alongside the GF Value, before making investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
