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Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Be Aware
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
Lumentum Holdings Operating Margin % Related Terms
Lumentum Holdings Operating Margin % Historical Data
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The historical data trend for Lumentum Holdings's Operating 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: Operating Margin % Comparison
For the Communication Equipment subindustry, Lumentum Holdings's Operating Margin %, along with its competitors' market caps and Operating 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 Operating Margin % vs Hardware Industry
For the Hardware industry and Technology sector, Lumentum Holdings's Operating Margin % distribution charts can be found below:
* The bar in red indicates where Lumentum Holdings's Operating Margin % falls into.
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
Lumentum Holdings's Operating Margin % for the fiscal year that ended in Jun. 2026 is calculated as
* 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.
Lumentum Holdings (XSWX:LITE1) has a Operating Margin % of 27.99% as of Jun. 2026. Operating margin is the ratio of total operating income to net sales. View historical data on Lumentum Holdings and its competitors. This is 216% above median its historical median of 8.87. According to the industry distribution chart, Lumentum Holdings ranks #264 out of 2477 companies in the Hardware industry, placing it in the top 10.7%.
Is Lumentum Holdings' Operating Margin % too high?
Lumentum Holdings' current Operating Margin % of 27.99% is 216% above median its 10-year median of 8.87. The Hardware industry median Operating Margin % is 3.88. Lumentum Holdings' value of 27.99% is 621.4% above this industry median. Based on the distribution chart, Lumentum Holdings ranks #264 out of 2477 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' Operating Margin % compare to HPE and CIEN?
According to the Hardware industry distribution chart, Lumentum Holdings ranks #264 out of 2477 companies for Operating Margin %. This places Lumentum Holdings in the top 11% of its industry — outperforming the majority of peers. The industry median Operating Margin % is 3.88. Lumentum Holdings' value of 27.99% is 621.4% above this benchmark. While the company's 10-year median is 8.87 vs. the industry median of 3.88, 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 Operating Margin % for a Hardware company?
The median Operating Margin % among Hardware companies is 3.88, based on 2,477 companies in the industry. Companies in the top quartile (top 25%) have a Operating Margin % significantly above this median, while those in the bottom quartile fall well below. However, Operating Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Lumentum Holdings's current Operating Margin % of 27.99% is 621.4% 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 Operating Margin % mean?
A high Operating Margin % can signal that a stock is expensive relative to its fundamentals. Operating margin is the ratio of total operating income to net sales. View historical data on Lumentum Holdings and its competitors. For the Hardware industry, the median Operating Margin % is 3.88 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Lumentum Holdings's current Operating Margin % is 27.99%, which is 216% above median its own 10-year median of 8.87. 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 Operating Margin % of 27.99%. 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 Operating Margin % is 27.99%, which is 216% above median its 10-year median of 8.87 and 621.4% above the Hardware industry median of 3.88. 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 Operating Margin % calculated?
Operating Margin % is calculated from a company's financial statements. For Lumentum Holdings (XSWX:LITE1), the current Operating Margin % is 27.99% 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:
Operating Margin %: 27.99% (216% above median its 10-year median of 8.87)
GF Value™: CHF132.25 vs. price of CHF720.20 (444.6% above fair value)
Industry Position: 621.4% above the Hardware median (#264 of 2477)
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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