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Lumentum Holdings Inc – Other Communications Equipment Manufacturing
Lumentum is a market-leading designer and manufacturer of innovative optical and photonic products enabling optical networking and laser applications worldwide. Lumentum optical components and subsystems are part of virtually every type of telecom, enterprise, and data center network. Lumentum lasers enable advanced manufacturing techniques and diverse applications including next-generation 3D sensing capabilities. Lumentum is headquartered in San Jose, California with R&D, manufacturing, and sales offices worldwide.
Analysis Results
Intrinsic Value $449.11
Latest Price $68.57
Relative Value 85% undervalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 41.6%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 8.0%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 41.6%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2023 0.593 0.549
2024 0.84 0.72
2025 1.19 0.944
2026 1.68 1.24
2027 2.38 1.62
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 40.5 billion. This corresponds to a present value of 25.5 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 5.07 billion. Adding in the terminal value gives a total present value of 30.6 billion.

There are presently 68.2 million outstanding shares, so the intrinsic value per share is 449.11.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 3,139,200,000
Current Cash 2,549,000,000
Current Liabilities 716,500,000
Current Debt 409,900,000
Non-Cash Working Capital (NCWC) 283,600,000
Change in NCWC 66,700,000
EBIT 302,200,000
Tax Provision 36,200,000
Depreciation and Amortization 167,100,000
Capital Expenditure -91,200,000
Unlevered Free Cash Flow 398,268,141
Current Assets 2,436,800,000
Current Cash 1,946,000,000
Current Liabilities 664,600,000
Current Debt 390,700,000
Non-Cash Working Capital (NCWC) 216,900,000
Change in NCWC 3,100,000
EBIT 327,200,000
Tax Provision 65,800,000
Depreciation and Amortization 177,100,000
Capital Expenditure -84,800,000
Unlevered Free Cash Flow 376,109,479
Current Assets 2,050,000,000
Current Cash 1,553,800,000
Current Liabilities 283,000,000
Current Debt 600,000
Non-Cash Working Capital (NCWC) 213,800,000
Change in NCWC -61,900,000
EBIT 216,400,000
Tax Provision 38,800,000
Depreciation and Amortization 191,900,000
Capital Expenditure -86,000,000
Unlevered Free Cash Flow 212,228,341
Current Assets 1,332,800,000
Current Cash 768,500,000
Current Liabilities 294,000,000
Current Debt 5,400,000
Non-Cash Working Capital (NCWC) 275,700,000
Change in NCWC 66,700,000
EBIT 41,000,000
Tax Provision 3,100,000
Depreciation and Amortization 157,500,000
Capital Expenditure -166,000,000
Unlevered Free Cash Flow 99,200,000
Current Assets 1,127,200,000
Current Cash 711,500,000
Current Liabilities 214,000,000
Current Debt 7,300,000
Non-Cash Working Capital (NCWC) 209,000,000
Change in NCWC 18,200,000
EBIT 147,100,000
Tax Provision -118,700,000
Depreciation and Amortization 77,200,000
Capital Expenditure -93,200,000
Unlevered Free Cash Flow 149,300,000
Current Assets 930,300,000
Current Cash 555,300,000
Current Liabilities 184,200,000
Current Debt 0
Non-Cash Working Capital (NCWC) 190,800,000
Change in NCWC 32,100,000
EBIT 59,600,000
Tax Provision 42,700,000
Depreciation and Amortization 61,000,000
Capital Expenditure -138,100,000
Unlevered Free Cash Flow 14,600,000
Current Assets 489,500,000
Current Cash 157,100,000
Current Liabilities 173,700,000
Current Debt 0
Non-Cash Working Capital (NCWC) 158,700,000
Change in NCWC -15,400,000
EBIT 18,900,000
Tax Provision 400,000
Depreciation and Amortization 54,600,000
Capital Expenditure -82,000,000
Unlevered Free Cash Flow -24,679,381

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