Lumentum Holdings Inc. — Earnings Quality Grade F
LITE · Technology
Major red flags
Screening Summary
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO 55 days, change +3 days YoY
AR outpaced revenue for 2 consecutive years
Revenue 21.0%, CFFO 411.3%. Cash follows revenue
Expense Quality
Inventory 18.0% vs COGS 7.0%. Normal
CapEx growth 68.6% is >2x revenue growth 21.0%
SG&A/Gross Profit = 75.7%, exceeds 70%
Gross margin swung +9.5pp (18.5% → 28.0%)
Cash Flow Quality
CFFO/NI = 4.88. Profits backed by cash
FCF is negative ($-0.1B)
Accruals ratio = -2.4%. Low accruals
Cash $0.9B covers only 34% of debt $2.6B
Balance Sheet Health
Goodwill+Intangibles $1.5B = 134% of equity. Over 50%
Debt/EBITDA = 24.4x (>4x). Interest coverage = -8.7x (<2x). Financial stress
Other assets -13.6% vs revenue 21.0%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions negative for 3 years
Goodwill+Intangibles change -9% YoY. Normal
Manipulation Score
M-Score = -2.50 (< -2.22). Unlikely manipulator
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-10