DCF Studio

    LITE · NMS · Technology

    Lumentum Holdings Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -5.17

    Market price

    USD 684.40

    Implied upside

    -100.8%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-06-30

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.

    Current EV/EBITDA of 75.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD -5.17-100.8%
    Exit multiple
    USD 243.95-64.4%
    Market price
    USD 684.40

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -1025m-87m850mFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 4.5bnUSD 6.7bnUSD 9.5bnUSD 12.9bnUSD 16.8bnUSD 21.0bnUSD 25.1bnUSD 28.5bnUSD 30.9bnUSD 31.6bn+24.1%
    EBITUSD -287.5mUSD -424.0mUSD -601.4mUSD -819.2mUSD -1.1bnUSD -1.3bnUSD -1.6bnUSD -1.8bnUSD -2.0bnUSD -2.0bn-24.1%
    NOPATUSD -227.2mUSD -335.0mUSD -475.1mUSD -647.1mUSD -845.1mUSD -1.1bnUSD -1.3bnUSD -1.4bnUSD -1.6bnUSD -1.6bn-24.1%
    Add depreciation & amortisationUSD 681.4mUSD 1.0bnUSD 1.4bnUSD 1.9bnUSD 2.5bnUSD 3.2bnUSD 3.8bnUSD 4.3bnUSD 4.7bnUSD 4.8bn+24.1%
    Less capital expenditureUSD -524.1mUSD -736.2mUSD -992.4mUSD -1.3bnUSD -1.6bnUSD -1.9bnUSD -2.1bnUSD -2.2bnUSD -2.2bnUSD -2.1bn+16.7%
    Capex, % of revenue11.6%11.0%10.5%9.9%9.4%8.9%8.3%7.8%7.2%6.7%-
    Less increase in working capitalUSD -433.6mUSD -617.3mUSD -802.5mUSD -985.4mUSD -1.1bnUSD -1.2bnUSD -1.2bnUSD -991.9mUSD -666.8mUSD -222.0m-7.2%
    Free cashflow to firmUSD -503.5mUSD -683.8mUSD -844.9mUSD -972.4mUSD -1.0bnUSD -957.3mUSD -733.1mUSD -337.4mUSD 210.1mUSD 850.2m-
    Discount factor0.95010.85770.77430.69900.63100.56960.51420.46420.41910.3783-
    Present valueUSD -478.4mUSD -586.5mUSD -654.2mUSD -679.7mUSD -646.7mUSD -545.3mUSD -377.0mUSD -156.6mUSD 88.1mUSD 321.6m-
    Present Value Of The ForecastUSD -3.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.432Reported 1.645, pulled toward 1.0 (Blume)
    Cost of equity10.95%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 24.6x interest cover. Book interest / average debt was lower, at 1.0%.
    Market capitalisationUSD 62.0bn97.4% of capital
    Total debtUSD 1.7bn2.6% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.77%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD -5.17

    -156% of EV

    Forecast FCFF, final year
    USD 850.2m
    Capex at depreciation, working capital in reinvestment
    USD 628.6m
    Less reinvestment at g/ROIC (23.2% of NOPAT)
    USD -145.8m
    Capitalised
    USD 482.7m
    ROIC (WACC floor)
    10.8%
    Terminal value, undiscounted
    USD 6.0bn
    Terminal value, discounted
    USD 2.3bn
    Enterprise value
    USD -1.5bn
    Less net debt
    USD -1.1bn
    Equity value
    USD -385.3m

    Exit at 20.0x EBITDA

    Value per shareUSD 243.95

    122% of EV

    Terminal value, undiscounted
    USD 55.1bn
    Terminal value, discounted
    USD 20.8bn
    Enterprise value
    USD 17.1bn
    Less net debt
    USD -1.1bn
    Equity value
    USD 18.2bn

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.77%6.725.915.114.313.50
    9.77%0.57-0.11-0.79-1.47-2.15
    10.77%-4.00-4.58-5.17-5.75-6.33
    11.77%-7.43-7.93-8.43-8.93-9.43
    12.77%-10.00-10.43-10.87-11.31-11.75

    Outlined: this model. Green text: above today's price of 684.40. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    EBIT margin17.8%-6.4%26.2%
    Discount rate-10.8%3.1%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.