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what it is
Lumentum makes the lasers and optical parts that move data through cloud networks, telecom gear, factories, and sensing systems.
how it gets paid
Last year Lumentum made $1.6B in revenue. Data center optics was the main engine at $0.88B, or 55% of sales.
why it's growing
Revenue grew 21.0% last year. Annual revenue reached $1.6B, up 21.0% vs. prior year, while gross margin was 36.2%.
what just happened
Latest quarter revenue belongs near ~$400M on a $1.6B year — not $1.2B in one quarter (that overshot the annual bridge). EPS on the print here: ~$0.99.
At a glance
B balance sheet — gets the job done, barely
10/100 earnings predictability — expect surprises
898.5x trailing p/e — you're paying up for this one
20.5% return on capital — every dollar works hard here
xvary composite: 39/100 — weak
What they do
Lumentum makes the lasers and optical parts that move data through cloud networks, telecom gear, factories, and sensing systems.
Its parts sit deep inside customer hardware, so swapping vendors is painful once a design is locked. Cloud & Networking made 86% of fiscal 2025 revenue, and R&D ran at 18.5% of sales, which is the company paying to stay inside your customer's box.
How they make money
$1.6B
annual revenue · their business grew +21.0% last year
Data center optics
$0.88B
+21.0%
Telecom networking
$0.50B
+21.0%
Industrial lasers
$0.13B
flat
3D sensing
$0.06B
flat
Life-science and other
$0.03B
flat
The products that matter
core photonics platform
Optical Components
$1.6B revenue
this is the core $1.6B business and the reason ~21% FY growth mattered last year. there is no other segment here to bail out a weak quarter.
entire company
cloud and telecom optics
Network Optics
$425M last quarter
the snapshot does not break out this demand stream separately. that's the point. one $425M quarter can swing the whole narrative when investors are underwriting AI infrastructure growth.
AI exposure
industrial laser systems
Manufacturing Lasers
margin n/m at segment level
these applications broaden the story beyond telecom, but consolidated operating margin here is negative — do not read a fake 15% segment margin as whole-company truth.
diversification, not separation
Key numbers
898.5x
trailing p/e
P/E ratio → how many dollars you pay for $1 of trailing profit → so what: you are paying an almost comic price for earnings that just recovered.
−10.9%
operating margin
Operating margin → profit after running the business → so what: still underwater at the operating line — the KPI had dropped the minus sign.
20.5%
return on capital
Return on capital → profit produced from the money tied up in the business → so what: when demand is there, this business can still throw off strong economics.
$2.2B
long-term debt
Debt → money owed over time → so what: leverage is real, even if it is listed as 8% of capital.
Financial health
B
strength
- balance sheet grade B — adequate — nothing special
- risk rank 4 — safer than 20% of stocks
- price stability 20 / 100
- long-term debt $2.2B (8% of capital)
- net profit margin n/m vs operating loss — do not pair big net margin ticks with a −10.9% operating margin story without a labeled adjustment
- return on equity 46% — $0.46 profit for every $1 investors have put in
B — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in LITE 3 years ago → it's now worth $55,530.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Quarter revenue near ~$400M, EPS about $0.99 — optics demand still rebuilding.
Annual revenue reached $1.6B, up 21.0% vs. prior year, while gross margin was 36.2%. The latest quarterly beat was helped by stronger cloud and networking demand and management said December sales should grow more than 20% sequentially.
~$400M
quarter revenue (approx.)
$0.99
eps (Q)
36.2%
gross margin (FY / blended)
the number that mattered
Demand inflection vs a still-negative operating margin — FY revenue growth was ~21%, not a made-up 174% quarter on a $1.6B base.
-
the company posted fiscal first-quarter adjusted earnings of $1.10 a share (versus gaap earnings of a nickel a share), on a hefty 58% jump in revenues.the top line reaped the rewards of impressive demand reported by data center, data-center interconnect, and long-haul markets.
-
and leadership expects more than 20% sequential growth in the december interim, and comparisons may improve even more during the latter half of the year, thanks to two of lumentum's next major growth drivers, optical circuit switches and co-packaged optics.all told, thanks to its broad optical portfolio, the company seems well positioned to support the impressive expansion of ai (artificial intelligence). finally, we look for a continued improvement in margins, with the fiscal first-quarter adjusted operating margin up 1,570 basis points vs. prior year.
-
all told, we look for the company to post fiscal 2026 adjusted earnings of $5.80 a share, with a strong 20% bottom-line advance likely in the cards for the following year.
-
investors are quite enthusiastic about the company's long-term prospects.
-
to wit, lite stock has jumped more than 70% in value since our early november review, as compared to a relatively flat performance by the s&p 500 index over the same time frame.
source: company earnings report, 2026
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What could go wrong
the #1 risk is AI and telecom optics demand failing to justify a 898.5x trailing p/e.
med
the stock already prices in a comeback
the shares trade at $332.45 while the 3–5 year target midpoint is $292. when the current price is already above the midpoint target, execution has to be clean.
a small miss matters more here because there is less valuation cushion than the headline growth story suggests.
med
one revenue bucket means one broad exposure
the snapshot gives one top-line segment: $1.6B of total revenue. that means you are not buying a collection of offsetting businesses. you are buying one photonics platform tied to the same spending cycle.
if AI infrastructure or telecom orders pause, the whole income statement feels it.
med
earnings and price action are both jumpy
earnings predictability sits at 10/100 and price stability at 20/100. in human terms: surprises are common, and the stock tends to react like it knows it.
that combination can turn a normal quarter into a sharp rerating very quickly.
med
deal and lawsuit complications can slow the story
the page already flags a lawsuit involving lumentum, coherent, and echostar, along with regulatory approval risk for key deals. that is not abstract when analysts are underwriting a path to $3B in revenue.
delays do not just shift timing. they challenge the growth case the current multiple is built on.
when a stock trades at $332.45, carries a 10/100 predictability score, and sits above a $292 target midpoint, small operational misses can become big valuation problems.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next quarter has to confirm the recovery
the latest quarter was $0.89 EPS on $425M revenue. the next print needs to build on that, not merely repeat the story.
revenue path
whether the $3B revenue expectation still looks credible
analysts are modeling $3B for fy2026 against a $1.6B base. that's the number carrying a lot of the valuation burden.
AI optics
whether deal headlines keep turning into orders
nvidia-related optics news moved the stock hard in both directions. watch for evidence that AI infrastructure demand is becoming revenue, not just narrative fuel.
legal
regulatory and lawsuit updates
the page already points to deal approval risk and litigation involving lumentum, coherent, and echostar. any delay matters more when the stock is priced this tightly.
Analyst rankings
short-term outlook
below average
momentum score 4 — analysts see underperformance risk from here because the setup is already demanding.
risk profile
below average
stability score 4 — more volatile than most. in human-speak, this is not where you go for a calm chart.
chart momentum
top 20%
technical score 2 — chart watchers still like the tape more than fundamental analysts do.
earnings predictability
10 / 100
earnings are hard to model here. when the business surprises, the stock usually notices.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 303 buyers vs. 238 sellers in 3q2025. total institutional holdings: 80.3M shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$108
$475
$332
current price
$292
target midpoint · 12% from current · 3-5yr high: $475
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