Lumentum Holdings Inc (LITE, Financial) has experienced a notable shift in its stock performance over recent periods. With a current market capitalization of $3.57 billion, the stock price stands at $53.01. Over the past week, LITE has seen a 2.85% gain, indicating a positive short-term momentum. However, the past three months tell a different story, with a 14.08% loss, reflecting a more challenging quarter. When assessing the stock's value, the GF Value is currently $73.68, down from a past GF Value of $85.33. This suggests that LITE is currently modestly undervalued, a shift from its previous assessment as a possible value trap where investors were advised to think twice before investing.
Company Overview
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's business 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, indicating a potential for growth in emerging markets.
Profitability Insights
Lumentum's Profitability Rank stands at 6/10, which is a moderate score in the context of the industry. The company's Operating Margin is currently at -18.88%, which, despite being negative, fares better than 13.91% of 2,473 companies in the same domain. The ROE and ROA are at -18.97% and -5.89% respectively, indicating challenges in generating returns on equity and assets. However, these figures are still better than a significant portion of the industry. The ROIC at -10.92% also suggests room for improvement. Over the past decade, Lumentum has maintained profitability for 6 years, which is commendable given the competitive nature of the hardware industry.
Growth Trajectory
The company's Growth Rank is 7/10, reflecting a strong growth profile. 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 of which are better than over half of the companies in the industry. However, the Total Revenue Growth Rate (Future 3Y To 5Y Est) is estimated at -0.92%, which is a point of concern. On a brighter note, the 3-Year EPS without NRI Growth Rate is an impressive 34.20%, and the 5-Year EPS without NRI Growth Rate is even more remarkable at 55.80%, indicating strong earnings growth that outpaces many competitors.
Investor Holdings
Notable investors have taken an interest in Lumentum Holdings Inc, with Ken Fisher (Trades, Portfolio) holding 583,635 shares, representing a 0.87% share percentage. Steven Cohen (Trades, Portfolio) follows closely with 580,080 shares, accounting for 0.86% of the shares, and Jim Simons (Trades, Portfolio) holds 369,460 shares, making up 0.55% of the shares. These holdings by prominent investors underscore a level of confidence in the company's potential.
Competitive Landscape
Lumentum operates in a competitive hardware industry, with key competitors like Extreme Networks Inc (EXTR, Financial) with a market cap of $1.6 billion, Belden Inc (BDC, Financial) at $3.59 billion, and Viasat Inc (VSAT, Financial) with a market cap of $2.36 billion. These companies, with market capitalizations close to that of Lumentum, provide a context for understanding Lumentum's market position and the competitive dynamics at play.
Conclusion
In summary, Lumentum Holdings Inc's stock performance has seen fluctuations, with recent gains overshadowed by losses over the past quarter. The company's current valuation, as indicated by the GF Value, suggests it is modestly undervalued, presenting a potential opportunity for investors. Lumentum's profitability, while challenged by negative margins, still compares favorably within the industry. The company's growth prospects, particularly in EPS, are robust, although revenue estimates indicate potential headwinds. With significant holdings by respected investors and a competitive stance in the hardware industry, Lumentum Holdings Inc warrants attention from value investors seeking opportunities in the technology sector.
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.
