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Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Lumentum Holdings had a gross margin of 47.43% for the quarter that ended in Jun. 2026 => Durable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Lumentum Holdings Gross Margin % Related Terms
Lumentum Holdings Gross Margin % Historical Data
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The historical data trend for Lumentum Holdings's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
XSWX:LITE1 vs HPE, CIEN, MSI: Gross Margin % Comparison
For the Communication Equipment subindustry, Lumentum Holdings's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Lumentum Holdings Gross Margin % vs Hardware Industry
For the Hardware industry and Technology sector, Lumentum Holdings's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Lumentum Holdings's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Lumentum Holdings (XSWX:LITE1) has a Gross Margin % of 47.43% as of Jun. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Lumentum Holdings and its competitors. This is 42% above median its historical median of 33.42. Over the past decade, Lumentum Holdings' Gross Margin % has ranged from 18.50 to 46.05. According to the industry distribution chart, Lumentum Holdings ranks #522 out of 2455 companies in the Hardware industry, placing it in the top 21.3%.
Is Lumentum Holdings' Gross Margin % too high?
Lumentum Holdings' current Gross Margin % of 47.43% is 42% above median its 10-year median of 33.42. Over the past 10 years, this metric has ranged from a low of 18.50 to a high of 46.05. The Hardware industry median Gross Margin % is 24.66. Lumentum Holdings' value of 47.43% is 92.3% above this industry median. Based on the distribution chart, Lumentum Holdings ranks #522 out of 2455 companies in the Hardware industry, which is in the top quartile — a strong position relative to peers. Overall, Lumentum Holdings has a GF Score™ of 67/100, reflecting its overall financial health beyond just this single metric.
How does Lumentum Holdings' Gross Margin % compare to HPE and CIEN?
According to the Hardware industry distribution chart, Lumentum Holdings ranks #522 out of 2455 companies for Gross Margin %. This places Lumentum Holdings in the top 21% of its industry — outperforming the majority of peers. The industry median Gross Margin % is 24.66. Lumentum Holdings' value of 47.43% is 92.3% above this benchmark. Historically, Lumentum Holdings' own Gross Margin % has ranged from 18.50 to 46.05 over the past decade. While the company's 10-year median is 33.42 vs. the industry median of 24.66, Lumentum Holdings has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Hardware company?
The median Gross Margin % among Hardware companies is 24.66, based on 2,455 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Lumentum Holdings's current Gross Margin % of 47.43% is 92.3% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Lumentum Holdings and its competitors. For the Hardware industry, the median Gross Margin % is 24.66 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Lumentum Holdings's current Gross Margin % is 47.43%, which is 42% above median its own 10-year median of 33.42. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Lumentum Holdings stock overvalued right now?
Lumentum Holdings (XSWX:LITE1) has a current Gross Margin % of 47.43%. The stock's GF Value™ is CHF132.25, compared to a current price of CHF720.20 — trading 444.6% above its estimated fair value. The current Gross Margin % is 47.43%, which is 42% above median its 10-year median of 33.42 and 92.3% above the Hardware industry median of 24.66. Lumentum Holdings' overall GF Score™ is 67/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Lumentum Holdings (XSWX:LITE1), the current Gross Margin % is 47.43% as of Jun. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Lumentum Holdings (XSWX:LITE1) Overvalued in 2026?
Based on GuruFocus' analysis, Lumentum Holdings stock appears to be overvalued.
The current stock price of CHF720.20 is trading 444.6% above its estimated GF Value™ of CHF132.25.
Key valuation signals for XSWX:LITE1:
Gross Margin %: 47.43% (42% above median its 10-year median of 33.42)
GF Value™: CHF132.25 vs. price of CHF720.20 (444.6% above fair value)
Industry Position: 92.3% above the Hardware median (#522 of 2455)
No single metric tells the full story. See the XSWX:LITE1 stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Lumentum Holdings Inc is a California-based technology firm. The company provides two types of optical and photonic products: optical components that are used in telecommunications networking equipment, and commercial lasers for manufacturing, inspection, and life-science lab uses. Its segments are Optical Communications and Commercial Lasers. The firm is also expanding into new optical applications, such as 3-D sensing laser diode for consumer electronics. It generates maximum revenue from the OpComms segment. The OpComms segment products include a wide range of components, modules, and subsystems to support customers including carrier networks for access (local), metro (intracity), long-haul, and submarine (undersea) applications.
67GF Score
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