_edited.png)
RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Lumentum Holdings Inc. (XNAS:LITE) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
LITE
Name:
Lumentum Holdings Inc. (XNAS:LITE)
Sector:
44.00M
Industry:
Communication Equipment
CEO:
Mr. Alan Lowe
Total Employees:
6,815
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -699.79% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF LUMENTUM HOLDINGS INC.(LITE) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND COMMUNICATION EQUIPMENT INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
79.59
One Month Price Target:
$80.01
Six Month Price Target :
$82.12
Likely Price in One Year's Time:
Ticker:
$84.65
Likely Trading Range Today Under (Normal Volatility)
$79.24
Price Upper limit ($) :
$80.04
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$74.83
This week:
$68.94
This month :
$58.29
Other Primary facts
Market Cap:
5.34B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
68.10M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
14.44%
-16.92%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$101.69
$91.53
$57.49
$67.65
Medium risk (<10%) entry points
Buy Call
Sell Call
$88.22
Buy Put:
Sell Put:
$86.06
$70.93
$73.12
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
LITE
Sharpe Ratio:
1.84%
Comparison:
LITE, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 41.58% higher than the industry
& is -19.48% lower than the market/S&P 500 average
Average Returns/Yield of
LITE
Daily returns:
0.06%
Weekly returns:
0.31%
Monthly returns:
1.26%
Yearly returns:
12.89%
Comparison of returns:
Average annual returns/yield (last 3 years) is 17.15% above industry average
Classification:
LITE, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.77
Statistical test of Returns:
LITE has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.94%
Weekly Volatility:
6.58%
Monthly Volatility:
13.17%
Yearly Volatility:
45.62%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.51%
Volatility in last five trading days has been -48.74% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.98%
Weekly VaR:
-13.38%
Monthly VaR:
-26.76%
How Much Can the price of
LITE
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-23%
Worst case (decline):
-92.71%
This translates to price declining to:
$61.33
This translates to price declining to:
$5.80
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
LITE is a 88.90% riskier investment compared to the market/S&P 500 & is 61.83% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -7.07% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
LITE
Beta in relation to market/S&P 500--0.95
Expected beta in 1 year's time:
0.726
Expected beta in 3 year's time:
1.026
Unlevered (debt free) Beta:
0.697
Beta in relation to Nasdaq (XNAS):
1.041
Beta in relation to all global stocks::
0.814
Beta Comparison & Analysis
Beta of competitors/peers::
1.328
Beta is -28.75% lower than peers
Average Industry Beta:
1.197
Beta is -20.96% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
18.95%
Sustainable growth rate is -58.52% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.055
Alpha is 256.03% above industry average alpha yield
Alpha is 348% higher than market/& is unsustainably high
Analysis of Cost of Capital of
LITE
Equity cost of capital:
0.096
Equity cost of capital is -15.15% below industry mean WACC
Unlevered (without debt) cost of capital:
7.10%
Before-tax cost of debt:
5.67%
After-tax cost of debt:
4.48%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
4.48%
WACC is -8.44% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$24.71
Revenue growth rate per share of (3Y):
2.75
Annual revenue growth rate is 9.27% above the industry average
EPS:
$2.46
Expected Annual growth rate of EPS (3Y):
0.00%
-
Free cash flow (FCF) per share:
$5.58
Balance sheet equity growth per share: -100.00%
Equity growth rate per share is 4221.74% higher than the industry
Debt per share
$12.59
EBITDA per share
$6.85
Valuation Analysis Today of
LITE
P/E Ratio:
29.83
P/E Ratio of Competitors/Peers:
300.6
P/E ratio is -90.08% lower than main peers & is -19.65% lower than the industry
Stock price/value with industry average P/E ratio: $91.33
LITE is -12.85% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
3.22
Price to sales ratio is 40.67% above the industry mean
P/B (Price to book value ratio):
2.75
Price to free cash flow: 14.26
Price to free cash flow ratio is -71.85% lower than the industry
Net income growth rate (3Y):
32.31%
Net income growth rate is -92.91% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
43.50%
Net debt to equity ratio:
33.17%
Debt to assets ratio:
24.37%
Net debt to assets ratio:
18.58%
Debt-to-asset ratio is -55.96% below industry average
Ability to repay debt:
Interest coverage ratio:
6.51
Interest coverage ratio is -82.14% less than industry average
Looking forward:
Debt growth rate:
4.25%
Annual debt growth is -142% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.612
Statistical significance of correlation:
LITE has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.552
Stock price is 10.87% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.552
Correlation of price movement with Nasdaq (^IXIC):
0.004
Covariance of price movement with the market:
0.006
Kurtosis
5.241
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.465
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
LITE
Gross Profit Margin Ratio:
182%
Operating Profit Margin Ratio:
17.46%
Operating profit margin is 171.48% higher than the industry
Net Profit Margin Ratio:
182%
Effective Tax Rate:
18.01%
Effective tax rate is -35.44% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
9.42%
Return on equity (ROE) is -72.88% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
5.28%
Return on assets (ROA) is 20.84% higher than the industry
Financial Leverage:
1.3x
Current Ratio:
3.96
Current ratio is 78.02% above industry average
Cash Conversion Cycle (days):
24.6
Cash conversion cycle is -60.70% below industry average
The remaining useful life of property plant & equipment is: 7.5 years
Stock based compensation to net income ratio:
13.35%
In-depth Efficiency Analysis
Revenue generated per employee:
246.9K
Each employee generates -55% less revenue than industry average revenue per employee
EBITDA generated per employee:
68.5K
Each employee generates -9% less EBITDA than industry average revenue per employee
Profit generated per employee:
27.2K
Each employee generates 10% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
6.5K
Each employee generates -509% less free cash flow than industry average revenue per employee
Assets/Capital per employee
160.8K
Each employee generates -509% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 8.01%
Growth rate in R&D investment/expenditure is -446.00% lower than the industry
Competitors/Peer firms of
LITE
II-VI INCORPORATED (XNAS:IIVI)
SILICON LABORATORIES INC. (XNAS:SLAB)
UNIVERSAL DISPLAY CORPORATION (XNAS:OLED)
THOUGHTWORKS HOLDING, INC (XNAS:TWKS)
GDS HOLDINGS LIMITED (XNAS:GDS)
PEGASYSTEMS INC. (XNAS:PEGA)
FLEX LTD. (XNAS:FLEX)
WIX.COM LTD (XNAS:WIX)
Azenta, Inc. (XNAS:AZTA)
Current Analyst Ratings
Strong buy�21%
Buy�17%
Hold�21%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
4/2/22
Revenue:
1.68B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
912.90M
769.70M
218.10M
-
254.40M
-
-
472.50M
2.50M
71.70M
168.60M
466.80M
293.70M
185.70M
226.50M
40.80M
185.70M
Statement of Cash Flow
Date:
Period:
41.80M
Differed Income Tax :
-
Stock Based Compensation :
24.80M
Change in Working Capital :
- 99500.00K
Accounts Receivables:
- 50400.00K
Other Working Capital:
- 18100.00K
Other Non-Cash Items:
13.30M
Net Cash Provided by Operating Activities:
61.90M
Investments in PP&E:
- 17900.00K
Net Acquisitions:
-
Purchases of Investments:
- 255900.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
10/2/21
2022
Q1
611.00M
1.27B
1.88B
263.20M
207.00M
68.20M
2.42B
428.40M
368.90M
219.80M
-
72.90M
6.00M
1.10B
-
3.52B
101.60M
407.50M
9.40M
-
102.60M
611.70M
857.50M
42.90M
935.90M
-
1.55B
100.00K
210.70M
8.5M
1.75B
October 2, 2021 at 6:00:00 AM
1.39B
1.97B
3.52B
-
1.27B
654.0M
151.00M
5.90M
- 116900.00K
-
-
- 91700.00K
-
- 16600.00K
- 108300.00K
-
- 163300.00K
611.00M
774.30M
61.90M
- 17900.00K
44.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
LITE
2023
2024
2025
2026
2027
$85.07
$272.41
$289.73
$308.15
$327.74