Is Lumentum Holdings, Inc. overvalued or undervalued?

As of 17 October 2025, Lumentum Holdings, Inc. has moved from a very expensive to an expensive valuation grade. The company appears to be overvalued given its high valuation ratios, including a Price to Book Value of 6.43, an EV to Sales ratio of 5.01, and an EV to Capital Employed ratio of 2.84, which are significantly higher than its peers. For instance, Generac Holdings, Inc. has a much lower EV to EBITDA of 18.40, indicating a more favorable valuation in comparison.
The company's financial metrics reveal concerning performance, with a ROE of -42.74% and a ROCE of -10.62%, further supporting the overvaluation verdict. Despite Lumentum's impressive stock performance, with a year-to-date return of 96.27% compared to the S&P 500's 13.30%, its high valuation ratios suggest that it may not sustain such growth levels moving forward.