Lumentum Holdings Inc. designs and manufactures optical and photonic components for communications and industrial end markets, and its financial profile combines strong liquidity (current ratio 4.37) and recovering cash generation (TTM operating cash flow $126.3M) with elevated leverage (debt-to-equity 2.1266) and historically volatile earnings.
The company shows clear recent per-share and earnings momentum: revenue per share rose to $26.46 and year‑over‑year revenue-per-share growth reached 33.6% in the most recent quarter, while diluted EPS improved to $1.62 with 1‑year EPS growth of 117.9% — see EPS Diluted & Revenue per Share. Top-line and bottom-line quarters have reversed prior troughs, with the latest quarterly revenue at $808.4M and quarterly net income at $144.2M (most recent figures) as detailed in Revenue & Net Income.
Earnings quality shows operating cash flow slightly exceeding net income on a trailing basis ($126.3M OCF vs $112.5M net income TTM), indicating cash conversion that merits attention in the Earnings Quality Analysis and Strategic Capital Allocation narratives.
Profitability has been volatile: gross margin fell as low as 24.7% in 2024 and has only partially recovered to 34.9% most recently, while an operating margin of −6.0% was reported in the latest comparable period — see Profit Margin Trends.
Net income itself swung to a deep trough of −$628.9M in 2024, underscoring earnings volatility, and the company’s balance sheet shows debt-to-equity of 2.1266 alongside a stretched trailing P/E that recently registered about 100.6x — see Revenue & Net Income, Return on Equity (ROE) and Price-to-Earnings (PE) Ratio Trend.
Key fundamentals to watch going forward are sequential revenue per share and diluted EPS trends (latest YoY changes 33.6% and 117.9%) and whether operating cash flow continues to exceed net income ($126.3M vs $112.5M TTM); margin recovery (gross margin 34.9%, operating margin −6.0%) and leverage metrics including debt-to-equity (2.1266) and interest coverage (10.05) should also be monitored, along with ROE (14.4% most recently) and movement in the P/E (≈100.6x) as outlined in the linked cards: Revenue & EPS Growth, Profit Margin Trends, Earnings Quality Analysis, Strategic Capital Allocation, Return on Equity (ROE) and Price-to-Earnings (PE) Ratio Trend.
The foundation of business quality and long-term value creation
Lumentum Holdings Inc.'s revenue has risen for three consecutive reported quarters, increasing from $533.8M (2025-09-27) to $665.5M (2025-12-27) and to $808.4M (2026-03-28). The series shows prior volatility, including several quarters above $1.0B (e.g., $1.31B on 2025-06-28, $1.26B on 2023-07-01, $1.04B on 2024-06-29) and troughs in the low-$300M range (e.g., $336.9M on 2024-09-28, $317.6M on 2023-09-30).
Net income exhibited a pronounced inflection: large losses through much of 2024 (for example, -$320.4M on 2024-06-29 and -$127.0M on 2024-03-30) gave way to positive results in recent quarters, with \$169.2M (2025-06-28), \$4.2M (2025-09-27), and \$144.2M (2026-03-28). The most recent quarterly revenue was $808.4M and the most recent quarterly net income was $144.2M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Sep 2024 to Sep 2025, Lumentum Holdings Inc converts approximately 35¢ of every revenue dollar into gross profit (gross margin: 34.9%).After accounting for operating expenses and taxes and expenses, the company retains 6.1% as net profit margin, resulting in $0.11B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Sep 2024 to Sep 2025
Analyzing long-term margin stability and competitive positioning
Lumentum Holdings Inc.'s gross margin shows a pronounced swing over the multi-year series: margins were near or above the high 40s/50% range through 2020–2022, fell to the mid-20s by mid/late 2024 (24.7%), and have rebounded through 2025 to the mid-30s (33.0% in 2025-06 and 34.9% in 2025-09). The 2021–2022 peak and the 2024 trough are notable inflection points, with the latest quarters showing partial recovery toward prior levels but below the prior multi-year highs.
Net profit margin followed a similar volatile pattern, moving from healthy double digits in 2020–2022 to deeply negative readings in 2024 (-45.6% in 2024-09), then improving to modestly positive in 2025 (1.6% in 2025-06 and 6.1% in 2025-09).
Operating margin, where reported, declined from strong positive levels in 2021–2022 (e.g., 21.4% in 2022-07, 17.2% in 2023-07) to negative in the most recent report available (‑6.0% in 2025-06).
The most recent gross margin was 34.9%, the most recent net profit margin was 6.1%, and the most recent operating margin observed was -6.0%.
Understanding Profit Margins
Between Sep 2024 and Sep 2025, Lumentum Holdings Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Lumentum Holdings Inc. shows a pronounced recovery in trailing twelve-month net income after a deep trough in 2023–2024. Net income fell sharply to as low as $-628.9M (period ending 2024-09-28) and remained negative into late 2024 (e.g., $-590.7M at 2024-12-28) before moving back into positive territory in 2025; the series shows $25.9M at the 2025-06-28 TTM point and a further increase to $112.5M at 2025-09-27. This marks a clear inflection from the multi-quarter losses observed in 2023–2024 to positive reported earnings through mid-2025.
Operating cash flow (TTM) has also declined from earlier peaks (notably $738.7M in 2021) but is positive in the most recent data and slightly exceeds reported net income in the latest comparable periods. The most recent trailing twelve-month operating cash flow is $126.3M (period ending 2025-06-28), versus trailing twelve-month net income of $112.5M (period ending 2025-09-27). The most recent trailing twelve-month net income was $112.5M and the most recent trailing twelve-month operating cash flow was $126.3M.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Lumentum Holdings Inc.'s ROE shows a sharp recent reversal. After very large negative trailing twelve-month ROE readings in late 2023 and 2024 (-70.2% on and -67.7% on ), the company moved back into positive territory with 2.3% on and then to 14.4% on , indicating a pronounced inflection over the last two reported quarters.
Across the full history, ROE has been volatile: prior peaks were 20.9% () and 20.1% (), with intermediate readings in the low-to-mid teens and occasional negatives. The current 14.4% is below the 2021 peak but represents a meaningful recovery from the deep negatives recorded in 2023–2024. The most recent ROE was 14.4% as of the period ending .
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Lumentum Holdings Inc.'s operating cash flow on a trailing twelve-month basis has declined materially from earlier peaks, falling from $738.7M (period ending 2021-07-03) to $126.3M as of the period ending 2025-06-28.
Investing cash flow has been consistently negative across the history shown, with large outflows in 2019–2020 and 2023 (examples: -$779.7M in 2019, -$987.7M in 2020, -$874.0M in 2023) and a notably smaller negative outflow of -$114.3M reported for the period ending 2024-06-29.
Financing cash flow has swung between sizable inflows and outflows over the same span: multi-hundred-million inflows in 2019–2020 and 2022 (for example $485.1M in 2019, $328.8M in 2020, $282.9M in 2022) shifted to a -$332.7M outflow for the period ending 2024-06-29, then to a modest inflow of $41.8M as of 2025-06-28.
Most recent trailing twelve-month values: Operating Cash Flow TTM $126.3M; Investing Cash Flow TTM -$114.3M; Financing Cash Flow TTM $41.8M.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Lumentum Holdings Inc.'s trailing twelve-month P/E ratio rose sharply in the most recent year: it peaked at 255.5x for the quarter ended 2025-06-28 before falling to 100.6x for the quarter ended 2025-09-27. These two recent quarters are notable inflection points relative to the company's prior reported P/E observations, showing a large expansion in valuation in 2025 followed by a substantial contraction the following quarter. Several intermediate quarterly rows in the dataset are blank, indicating no P/E value reported for those periods.
Looking further back, reported P/E ratios from 2020–2022 mostly ranged between about 13.9x and 42.2x, with discrete observations of 13.9x (2021-10-02), 26.8x (2022-07-02) and 42.2x (2022-10-01). The most recent reported P/E ratio for Lumentum Holdings Inc. is 100.6x (period end 2025-09-27).
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.