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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Lumentum Holdings Inc. (NASDAQ:LITE), it is a company with impressive financial health as well as an optimistic growth outlook. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Lumentum Holdings here.
High growth potential with adequate balance sheet
Investors in search for stocks with room to flourish should look no further than LITE, with its expected earnings growth of 84% which is expected to flow into an impressive return on equity of 21% over the next couple of years. LITE is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. LITE's has produced operating cash levels of 0.29x total debt over the past year, which implies that LITE's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
For Lumentum Holdings, I've put together three pertinent factors you should further examine:
- Historical Performance: What has LITE's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Valuation: What is LITE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LITE is currently mispriced by the market.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of LITE? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.