Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Lumentum Holdings Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 76.9% to -1.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 52, DPO 54, DIO 115). At a 9.0% WACC with mid-year discounting, the terminal value (156% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 20.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $6.75 per share, suggesting LITE is overvalued by 99.0% at the current price of $699.00.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | -135 | -225 | -295 | -195 | -193 | -198 |
| (−) Net Interest | 89 | 148 | 194 | 128 | 127 | 130 |
| (+) D&A | 136 | 166 | 230 | 312 | 356 | 365 |
| EBITDA | 90 | 89 | 129 | 245 | 290 | 297 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 245 | 410 | 538 | 355 | 352 | — |
| (−) ΔWC | 240 | 493 | 381 | -545 | -11 | — |
| Free Cash Flow (FCF) | -395 | -815 | -789 | 435 | -51 | — |
| Peers' EBITDA Multiple | 20.7x | |||||
| Terminal Value | 6,159 | |||||
| WACC / Discount Rate | 9.01% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -379 | -716 | -636 | 322 | -35 | 4,001 |
| Enterprise Value | 2,558 | |||||
| Projection Period | -1,444 | -56.4% | ||||
| Terminal Value | 4,001 | 156.4% | ||||
| (−) Current Net Debt | 2,088 | |||||
| Equity Value | 470 | |||||
| (÷) Outstanding Shares | 70M | |||||
| Fair Price | $7 | -99.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 16.7x | 18.7x | 20.7x | 22.7x | 24.7x |
|---|---|---|---|---|---|
| 7.0% | $0 | $6 | $12 | $18 | $24 |
| 8.0% | $0 | $3 | $9 | $15 | $21 |
| 9.0% | $0 | $1 | $7 | $12 | $18 |
| 10.0% | $0 | $0 | $4 | $10 | $15 |
| 11.0% | $0 | $0 | $2 | $7 | $12 |
Current price: $699.00. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.