Lumentum Holdings Inc. (LITE)

FairStock Score: 27/100 — RISKY

Key Financials

Strengths

• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• High return on equity of 29.3% demonstrating efficient capital deployment
• Altman Z-Score of 8.0 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 65.5% demonstrates strong top-line momentum
• Established organization with 10,562 employees providing operational scale

Concerns

• Trades significantly above Graham Number ($31) with negative 2446% margin of safety—limited downside protection
• High leverage at 3.92x debt-to-equity increases financial risk and interest expense burden

AI Analysis

Lumentum Holdings Inc. is a large-cap technology company valued at $55.5 billion. The business generates $2.1 billion in annual revenue with a 3.7% net margin. From a quality standpoint, Lumentum shows solid Piotroski F-Score of 7/9 and Altman Z-Score of 8.0 confirms fortress-level solvency. On valuation, the stock is commanding a steep 242.1x multiple, with trades far above its Graham Number ($31) with no margin of safety. Growth dynamics show revenue growing at 65.5% and profit growth of 228.4%. Our composite FairStock Score of 27/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Lumentum's 65% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. Operational leverage in the business model means incremental revenue growth could disproportionately boost bottom-line profitability.

Bear Case

At 242x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer