Lumentum reports results on Thursday 5 November, before the market opens. Growth is coming with wider margins, so profit is rising faster than sales. Revenue over the twelve months to Q4 2026 was $3.0 billion, which rose 83.2% on the year before.
What analysts expect
Analysts have been raising their forecasts going into the report. For the quarter, the analysts' average EPS estimate is $4.22, in a range from $4.17 to $4.37. The average revenue estimate for the quarter is $1.3 billion. Meanwhile, the analysts' average estimate for full-year EPS is $21.82, which would be up 151.7% on last year (based on 28 analysts). That estimate has risen 18.9% over the past 90 days. Of the analysts' recommendations, 23 are positive, 5 neutral and 0 negative.
Company guidance
In its latest earnings release, management set first quarter of fiscal year 2027 Non-GAAP diluted net income per share guidance at $4.05 to $4.35. In its latest earnings release, management set first quarter of fiscal year 2027 Net revenue guidance at $1.2 billion to $1.3 billion.
Earnings surprise model
The model estimates EPS could land above the analysts' average estimate by 4.0%. Its estimated chance of an EPS beat is 75.0%, based on the last 4 quarters. The model shrinks the median recent surprise toward zero and uses a neutral prior for beat frequency; this small sample is a reference estimate, not company guidance.
Track record against estimates
The company reported EPS above the analysts' average estimate in 4 of the last 4 quarters. Last quarter, EPS of $3.23 compared with an estimate of $2.97, above it by 8.8%.
The trends going in
Growth is speeding up. That growth rate was up 14.2 percentage points on the rate a quarter earlier. The trailing gross margin was 41.7%. The trailing operating margin was 17.4%, up 28.4 percentage points from a year earlier. The trailing net margin was negative, at −230.1%. The company made a net loss of $6.9 billion over the twelve months.
The cash picture
The share count is rising, so each share claims a smaller slice of the profit. Operating cash flow over the twelve months was $751.4 million, up 494.9% on the year before. Capital spending was $451.3 million, or 15.0% of revenue. Free cash flow, operating cash flow less capital spending, was $300.1 million, up 55.4% on the year before. Free cash flow was 10.0% of revenue (the free-cash-flow margin), up 16.3 percentage points from a year earlier. The average diluted share count rose 21.8% over the year.
In context
Measured against its own history: today's free-cash-flow margin of 10.0% is higher than 59% of the company's own past quarterly readings, which have ranged from −8.5% to 40.8%. Today's operating margin of 17.4% is higher than 88% of past readings (−31.9% to 31.3%). Today's twelve-month revenue growth rate of 83.2% is above every past reading (−23.1% to 69.0%).
Questions this report will answer
Whether the pick-up in revenue growth continues. Whether results land above or below the analysts' expectations set out above. Alongside that, Whether margins hold at the trailing levels above. The next filing will show whether the trends above continue, slow or reverse.
What it means for our valuation
These trends feed directly into what the shares are worth in our model. In our model, growth 5 percentage points lower would lower the value by 22.1%, and growth 5 percentage points higher would raise it by 28.3%. A free-cash-flow margin 1 percentage point lower would lower it by 8.8%.
