By analyzing existing basic indicators between Lumentum Holdings and Knowles, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Knowles with a short position in Lumentum Holdings. Check out our
pair correlation module for more information.
Let's begin by analyzing the assets. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Lumentum Holdings has an asset utilization ratio of 233.22 percent. This indicates that the company is making $2.33 for each dollar of assets. An increasing asset utilization means that Lumentum Holdings is more efficient with each dollar of assets it utilizes for everyday operations.
Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two entities, such as Lumentum or Infinera is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.
How important is Lumentum Holdings's Liquidity
Lumentum Holdings
financial leverage refers to using borrowed capital as a funding source to finance Lumentum Holdings ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Lumentum Holdings financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Lumentum Holdings' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Lumentum Holdings' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Lumentum Holdings's total debt and its cash.
Correlation Between Lumentum and Infinera
In general, Stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Lumentum Holdings together with similar or unrelated positions with a negative correlation. For example, you can also add Infinera to your portfolio. If Infinera is not perfectly correlated to Lumentum Holdings it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Lumentum Holdings, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down.
Are you currently holding both Lumentum Holdings and Infinera in your portfolio? Please note if you are using this as a pair-trade strategy between Lumentum Holdings and Infinera, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses. Please check
pair correlation details between LITE and INFN for more information.
Detailed Perspective On Lumentum Holdings
Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.
Revenue Breakdown
Let me now analyze Lumentum Holdings revenue. Based on the latest financial disclosure, Lumentum Holdings reported 1.72
B of revenue. This is 57.8% lower than that of the Technology sector and 64.88% lower than that of the
Communication Equipment industry. The revenue for all United States stocks is 81.77% higher than that of the entity. As for Knowles we see revenue of 785.1
M, which is 83.97% lower than that of the Communication Equipment
| Lumentum | 1.72 Billion |
| Sector | 4.08 Billion |
| Knowles | 785.1 Million |
Our perspective of the latest Lumentum Holdings dip
Latest Sortino Ratio is up to -0.02. Price may dip again. Lumentum Holdings shows above-average downside volatility for the selected time horizon. We advise investors to inspect Lumentum Holdings further and ensure that all market timing and asset allocation strategies are consistent with the estimation of Lumentum Holdings future alpha.
Our Takeaway on Lumentum Holdings Investment
Although many of the other players in the communication equipment industry are either recovering or due for a correction, Lumentum Holdings may not be performing as strong as the other in terms of long-term growth potentials. To sum up, as of the 11th of August 2020, our research shows that Lumentum Holdings is a rather very steady investment opportunity with a
low chance of bankruptcy in the next two years. From a slightly different view, the entity currently appears to be
overvalued. Our concluding 30 days buy-hold-sell recommendation on the firm is
Strong Hold.
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Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Lumentum Holdings. Please refer to our
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