Key Takeaways
- Lumentum stock is up 383% in the past year, as fiscal 2026 revenue rose 83% to $3.01 billion and Nvidia invested $2 billion.
- New shares from Nvidia’s deal and a debt swap slowed per-share growth, but analysts still expect normalized EPS to roughly quadruple by fiscal 2028.
- The CEO says Lumentum’s optical parts are sold out through early 2029, though rivals such as Coherent are adding laser capacity.
- After an October pullback, the stock trades around its three-year average forward multiple, and the Nov. 5 report is the next test.
Lumentum (LITE) stock is up 383% in the past year through Tuesday’s close, even after a 24% slide from its 52-week high. Rising yields and AI-spending worries knocked optics stocks down together in October.
So is it too late to buy? I don’t think so, because the earnings have grown into a lot of that run.
The Earnings Showed Up
Lumentum’s revenue rose 83% to $3.01 billion in fiscal 2026, and growth kept speeding up: 90% in the March quarter, then 109% in the June quarter.
Analysts expect revenue to more than triple by fiscal 2028.
Profitability turned even faster, after three straight years of operating losses.
In fiscal 2026, the GAAP operating margin swung to 17.4%, and the adjusted margin jumped from 9.7% to 29.8%.
The Share Count Grew Too
Not all of that reached shareholders. On March 2, Nvidia (NVDA) agreed to invest $2 billion in Lumentum, alongside a multi-billion purchase commitment. That money bought about 2.9 million shares of convertible preferred stock, at $695.31 each.
In April and May, Lumentum also swapped $1.12 billion of convertible notes for about 10.6 million shares. The swaps produced a $7.8 billion non-cash loss on debt extinguishment, which drove fiscal 2026’s $6.9 billion GAAP net loss.
The dilution shows up in the June quarter. Adjusted net income rose 415% from a year earlier, but adjusted EPS rose only 267% to $3.23, because diluted shares climbed 40% to 101.1 million. And as of Aug. 14, holders had asked to convert another $757.8 million of notes.
Analysts raised their numbers anyway. Fiscal 2027 EPS consensus has climbed from $18.13 at the end of June to $21.79, and fiscal 2028’s is $35.92, against $8.67 in fiscal 2026.
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Sold Out Through Early 2029
The bull case is scarcity. On the evening of Oct. 8, CEO Michael Hurlston told Bloomberg Television that Lumentum’s optical parts are “completely sold out” through early 2029. He also said Lumentum can’t meet about 70% of demand for some products through 2027, and the stock jumped on the interview.
The risk is that scarcity draws in supply. Coherent (COHR), up 82% in the past year, took its own $2 billion from Nvidia the same day. Coherent also set out to double its indium phosphide laser output by the end of September, and to more than double it again before 2028.
Lumentum has been here before, too. In fiscal 2024, revenue fell 23% when customers cut inventory, and its EBIT margin sank to -26.6%.
Lumentum Isn’t Too Late, If the Shortage Holds
Lumentum traded at 38x forward earnings at Monday’s close, and closer to 40x after Tuesday’s gain.
That’s well above the 30x five-year average. Against its recent past, though, it’s no stretch: about level with the three-year average of 40x, and under half the 80x it reached on May 4. The consensus target of $1,166 sits about 35% above Tuesday’s close.
The next test comes after the close on Nov. 5. Management guided to revenue of $1.225 billion to $1.275 billion and adjusted EPS of $4.05 to $4.35, a guide Hurlston said reaches Lumentum’s target model “more than a quarter ahead of schedule.” Watch two numbers: the non-GAAP diluted share count (the guide assumes about 102 million) and whether its shortfall in EMLs, a type of laser chip, is still above 30% of demand.
That second number decides it for me. The new shares took a bite out of the growth, but per-share earnings are still expected to roughly quadruple by fiscal 2028, and at 40x the stock sits inside its own recent range. An EML shortfall well under 30% on Nov. 5 would be the first sign the scarcity is fading, with plenty of room for the multiple to fall.
So What Is Lumentum Stock Actually Worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
