Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 21 Sept 2026
LITE· Technology
Lumentum Holdings
Lumentum Holdings lacks a clear economic moat and shows weak financial metrics, making it unsuitable for a Buffett-style investment.
Buffett fit
Weak fit
Owner
19
Durability
8
Management
27
Price
20
Score updated 22 Oct 2026 · analysis from 21 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of Lumentum would be concerning due to its negative of -1.3% over 5 years and declining EPS at -39.25% CAGR.
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Lumentum's durability is questionable with a -1.0% revenue CAGR and a history of unprofitability.
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With a share count CAGR of -0.78% and a yield of 0.32%, management has not significantly enhanced shareholder value.
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The of 134.8 and negative yield of -0.16% indicate a lack of .
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- The 5-year price target and the return it implies
- What would change the call
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1Net margin of 17.7% is in the top quintile for the technology sector.
- 2Interest coverage ratio of 10.0 indicates the company can meet its interest obligations comfortably.
- 3Share count has decreased slightly with a CAGR of -0.78% over 5 years.
- 4Net debt/EBITDA of 1.29 suggests manageable .
Concerns
5- 1 of -1.3% over 5 years is well below the sector's top-quintile cutoff of 14.0%.
- 2EPS CAGR of -39.25% over 5 years indicates a declining earnings trend.
- 3 of 37.7% is significantly below the sector's top-quintile cutoff of 60.6%.
- 4 ratio of 134.8 suggests extreme overvaluation relative to earnings.
Price history
$753+811.3%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Lumentum Holdings operates in the optical and photonic products industry, with segments in Optical Communications and Commercial Lasers. The company generates revenue through the sale of components, modules, and subsystems for fiber optic communication and laser applications. However, with a revenue CAGR of -1.0% over the past five years, the business model struggles to demonstrate growth. The of 9.5% is also below the sector's top-quintile cutoff of 18.0%, indicating weak unit economics.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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