Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Lumentum Holdings Inc., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2026-06-27), 10-K (reporting date: 2025-06-28), 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -7,232,921 – 18.49% × 4,756,400 = -8,112,248
The financial trajectory indicates a significant transition from economic value creation to substantial value destruction over the analyzed period. While the initial period showed a positive economic profit, the subsequent years are characterized by widening losses and a severe erosion of shareholder value, culminating in a critical decline by June 2026.
- Net Operating Profit After Taxes (NOPAT)
- A consistent downward trend is observed in NOPAT, which fell from a positive 442,032 thousand USD in 2021 to negative territory starting in 2023. Although a partial recovery occurred in 2025, the 2026 period reflects a catastrophic collapse, with NOPAT plummeting to -7,232,921 thousand USD, indicating a profound failure in operating profitability.
- Invested Capital Trends
- Invested capital grew steadily from 1,964,100 thousand USD in 2021 to 3,056,300 thousand USD in 2024. A significant expansion is noted in 2026, where invested capital rose to 4,756,400 thousand USD. The increase in the capital base occurred simultaneously with declining operating profits, which compounded the negative impact on economic value.
- Cost of Capital Fluctuations
- The cost of capital remained volatile, fluctuating between a low of 13.09% in 2023 and a peak of 18.49% in 2026. The rise in the cost of capital during the final period increased the financial burden of the invested capital, further exacerbating the decline in economic profit.
- Economic Profit Analysis
- Economic profit transitioned from a positive 118,687 thousand USD in 2021 to deep negative values. The value destruction accelerated significantly over time, moving from -157,007 thousand USD in 2022 to -8,112,248 thousand USD by June 2026. This pattern confirms that the returns on invested capital failed to meet the minimum required rate of return, leading to a massive destruction of economic value.
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Net Operating Profit after Taxes (NOPAT)
Lumentum Holdings Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2026-06-27), 10-K (reporting date: 2025-06-28), 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses on trade receivables.
3 Addition of increase (decrease) in deferred revenue and customer deposits.
4 Addition of increase (decrease) in product warranty reserve.
5 Addition of increase (decrease) in restructuring and related accrual.
6 Addition of increase (decrease) in equity equivalents to net income (loss).
7 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 33,800 × 3.80% = 1,284
8 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 23,084 × 21.00% = 4,848
9 Addition of after taxes interest expense to net income (loss).
10 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 60,200 × 21.00% = 12,642
11 Elimination of after taxes investment income.
A significant and accelerating deterioration in operational profitability is evident over the analyzed period, characterized by a transition from positive earnings to severe losses.
- Net Operating Profit After Taxes (NOPAT) Performance
- NOPAT exhibited a consistent downward trajectory, starting at 442,032 thousand USD in July 2021 and decreasing to 232,961 thousand USD by July 2022. The metric transitioned into negative territory in July 2023 (-170,266 thousand USD) and experienced further volatility through June 2024 (-457,466 thousand USD) and June 2025 (-233,587 thousand USD). This trend culminated in a precipitous collapse in June 2026, where NOPAT reached -7,232,921 thousand USD, indicating a profound decline in the ability to generate operating value.
- Net Income Trends
- Net income mirrored the decline observed in NOPAT, falling from 397,300 thousand USD in 2021 to 198,900 thousand USD in 2022, before entering a period of deficit in 2023 and 2024. Although a marginal recovery to 25,900 thousand USD was recorded in June 2025, this was followed by a substantial loss of -6,935,100 thousand USD in June 2026.
- Comparative Operational Analysis
- The strong correlation between NOPAT and net income suggests that the observed financial distress is rooted in core operational performance rather than non-operating expenses or financing structures. A notable divergence occurred in June 2025, where net income returned to a positive value despite NOPAT remaining negative; this suggests that non-operating gains or tax credits temporarily masked the continuing operational inefficiency during that period.
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Cash Operating Taxes
Lumentum Holdings Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2026-06-27), 10-K (reporting date: 2025-06-28), 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03).
An analysis of the tax obligations reveals a general downward trajectory in cash operating taxes over the observed period, characterized by an initial steady decline, a sharp contraction in 2024, and a subsequent period of modest recovery.
- Cash Operating Tax Trends
- Cash operating taxes exhibited a consistent decline from July 2021 to July 2023, moving from 81.9 million to 68.4 million. This downward trend accelerated significantly in June 2024, with cash taxes dropping to 37.4 million, representing the lowest point in the series. Following this trough, a gradual increase is observed in June 2025 and June 2026, with values rising to 46.6 million and 49.3 million, respectively, although these levels remain substantially lower than those recorded in 2021.
- Divergence Between Accounting Provisions and Cash Outflows
- A pronounced decoupling is observed between the income tax provision and cash operating taxes starting in 2024. In June 2024, the income tax provision peaked at 140.8 million while cash taxes fell to 37.4 million. This divergence intensified in the final two years, as the income tax provision shifted into substantial tax benefits of 198 million in 2025 and 237.7 million in 2026. Despite these accounting-based tax benefits, cash operating taxes remained positive and increasing, indicating that non-cash tax adjustments or deferred tax assets are driving the provision benefits while actual cash outflows for taxes persist.
- Impact on Economic Value Added (EVA) Components
- The reduction in cash operating taxes from 2021 through 2024 suggests an improvement in cash flow available for EVA calculations during that window. However, the subsequent rise in cash taxes from 2024 to 2026, occurring simultaneously with massive accounting tax benefits, suggests that the cash-basis tax burden is not declining at the same rate as the book-basis tax provision.
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Invested Capital
Lumentum Holdings Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2026-06-27), 10-K (reporting date: 2025-06-28), 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue and customer deposits.
5 Addition of product warranty reserve.
6 Addition of restructuring and related accrual.
7 Addition of equity equivalents to stockholders’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in progress.
10 Subtraction of short-term investments.
The total invested capital demonstrates a consistent upward trajectory over the analyzed period, rising from 1,964,100 thousand US dollars in July 2021 to 4,756,400 thousand US dollars by June 2026. While the growth was steady between 2021 and 2024, a period of relative stability occurred in 2025 before a substantial increase in the final year.
- Debt and Lease Obligations
- Total reported debt and leases exhibited a peak in July 2023 at 2,873,700 thousand US dollars, following a sharp increase from the 2021 baseline of 1,239,900 thousand US dollars. Subsequent years show a gradual reduction, culminating in a significant decline to 1,671,200 thousand US dollars by June 2026.
- Stockholders' Equity Trends
- A prolonged downward trend in stockholders' equity is observed from July 2021 through June 2024, with values falling from 1,972,800 thousand US dollars to a low of 957,300 thousand US dollars. This trend is reversed sharply in the final period, where equity increases to 4,643,900 thousand US dollars by June 2026.
- Capital Structure Dynamics
- The composition of invested capital shifted markedly over the period. Between 2021 and 2024, the expansion of invested capital was primarily driven by increased debt levels amid declining equity, indicating a period of rising financial leverage. Conversely, the increase in invested capital by June 2026 is almost entirely attributable to a surge in stockholders' equity, coinciding with a simultaneous reduction in total debt.
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Cost of Capital
Lumentum Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 86,910,330) | 86,910,330) | ÷ | 94,644,130) | = | 0.92 | 0.92 | × | 20.05% | = | 18.41% | ||
| Debt3 | 7,700,000) | 7,700,000) | ÷ | 94,644,130) | = | 0.08 | 0.08 | × | 1.22% × (1 – 21.00%) | = | 0.08% | ||
| Operating lease liability4 | 33,800) | 33,800) | ÷ | 94,644,130) | = | 0.00 | 0.00 | × | 3.80% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 94,644,130) | 1.00 | 18.49% | ||||||||||
Based on: 10-K (reporting date: 2026-06-27).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 8,245,404) | 8,245,404) | ÷ | 11,396,404) | = | 0.72 | 0.72 | × | 20.05% | = | 14.50% | ||
| Debt3 | 3,116,000) | 3,116,000) | ÷ | 11,396,404) | = | 0.27 | 0.27 | × | 4.74% × (1 – 21.00%) | = | 1.02% | ||
| Operating lease liability4 | 35,000) | 35,000) | ÷ | 11,396,404) | = | 0.00 | 0.00 | × | 3.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 11,396,404) | 1.00 | 15.54% | ||||||||||
Based on: 10-K (reporting date: 2025-06-28).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 3,834,520) | 3,834,520) | ÷ | 6,108,220) | = | 0.63 | 0.63 | × | 20.05% | = | 12.58% | ||
| Debt3 | 2,217,300) | 2,217,300) | ÷ | 6,108,220) | = | 0.36 | 0.36 | × | 4.74% × (1 – 21.00%) | = | 1.36% | ||
| Operating lease liability4 | 56,400) | 56,400) | ÷ | 6,108,220) | = | 0.01 | 0.01 | × | 3.50% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 6,108,220) | 1.00 | 13.97% | ||||||||||
Based on: 10-K (reporting date: 2024-06-29).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 3,547,106) | 3,547,106) | ÷ | 6,190,606) | = | 0.57 | 0.57 | × | 20.05% | = | 11.49% | ||
| Debt3 | 2,581,400) | 2,581,400) | ÷ | 6,190,606) | = | 0.42 | 0.42 | × | 4.81% × (1 – 21.00%) | = | 1.58% | ||
| Operating lease liability4 | 62,100) | 62,100) | ÷ | 6,190,606) | = | 0.01 | 0.01 | × | 3.10% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 6,190,606) | 1.00 | 13.09% | ||||||||||
Based on: 10-K (reporting date: 2023-07-01).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 6,203,910) | 6,203,910) | ÷ | 8,678,810) | = | 0.71 | 0.71 | × | 20.05% | = | 14.33% | ||
| Debt3 | 2,414,900) | 2,414,900) | ÷ | 8,678,810) | = | 0.28 | 0.28 | × | 5.68% × (1 – 21.00%) | = | 1.25% | ||
| Operating lease liability4 | 60,000) | 60,000) | ÷ | 8,678,810) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 8,678,810) | 1.00 | 15.59% | ||||||||||
Based on: 10-K (reporting date: 2022-07-02).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 6,298,728) | 6,298,728) | ÷ | 8,173,528) | = | 0.77 | 0.77 | × | 20.05% | = | 15.45% | ||
| Debt3 | 1,815,400) | 1,815,400) | ÷ | 8,173,528) | = | 0.22 | 0.22 | × | 5.67% × (1 – 21.00%) | = | 0.99% | ||
| Operating lease liability4 | 59,400) | 59,400) | ÷ | 8,173,528) | = | 0.01 | 0.01 | × | 3.50% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 8,173,528) | 1.00 | 16.46% | ||||||||||
Based on: 10-K (reporting date: 2021-07-03).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Lumentum Holdings Inc., economic spread ratio calculation, comparison to benchmarks
| Jun 27, 2026 | Jun 28, 2025 | Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | (8,112,248) | (706,390) | (884,395) | (550,399) | (157,007) | 118,687) | |
| Invested capital2 | 4,756,400) | 3,043,200) | 3,056,300) | 2,902,900) | 2,500,700) | 1,964,100) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -170.55% | -23.21% | -28.94% | -18.96% | -6.28% | 6.04% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Apple Inc. | — | 107.15% | 164.44% | 137.63% | 199.15% | 195.51% | |
| Arista Networks Inc. | — | 53.98% | 35.40% | 20.78% | 16.31% | 31.36% | |
| Cisco Systems Inc. | -1.94% | -6.40% | -3.27% | 3.42% | 3.39% | 2.64% | |
| Dell Technologies Inc. | -0.24% | -9.74% | -8.37% | -0.71% | 3.15% | -1.37% | |
| Super Micro Computer Inc. | -3.51% | -12.87% | -11.23% | -1.14% | -9.37% | -17.80% | |
Based on: 10-K (reporting date: 2026-06-27), 10-K (reporting date: 2025-06-28), 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -8,112,248 ÷ 4,756,400 = -170.55%
4 Click competitor name to see calculations.
The financial performance regarding economic value added shows a significant transition from value creation to substantial value destruction over the analyzed period. A persistent decline in economic profit is coupled with an expansion of the invested capital base, leading to a severe deterioration of the economic spread ratio.
- Economic Profit Trend
- The company transitioned from a positive economic profit of 118,687 thousand US dollars in 2021 to a series of deepening losses. After turning negative in 2022, the deficits accelerated, culminating in a profound loss of 8,112,248 thousand US dollars by June 2026. This trajectory indicates that the returns generated are increasingly insufficient to cover the cost of the capital employed.
- Invested Capital Growth
- Invested capital exhibited a general upward trajectory, increasing from 1,964,100 thousand US dollars in 2021 to 4,756,400 thousand US dollars in 2026. Despite a slight contraction in 2025, the overall increase in the capital base suggests a growth in assets that failed to produce proportional economic returns.
- Economic Spread Ratio Performance
- The economic spread ratio collapsed from a positive 6.04% in 2021 to -170.55% in 2026. The ratio turned negative in 2022 and continued to decline sharply, signaling a consistent inability to generate returns exceeding the cost of capital. The precipitous drop in the final period reflects the compounding effect of massive economic losses occurring alongside a significant increase in invested capital.
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Economic Profit Margin
Lumentum Holdings Inc., economic profit margin calculation, comparison to benchmarks
| Jun 27, 2026 | Jun 28, 2025 | Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | (8,112,248) | (706,390) | (884,395) | (550,399) | (157,007) | 118,687) | |
| Net revenue | 3,014,000) | 1,645,000) | 1,359,200) | 1,767,000) | 1,712,600) | 1,742,800) | |
| Add: Increase (decrease) in deferred revenue and customer deposits | 16,100) | 100) | (1,500) | 2,100) | (600) | (1,300) | |
| Adjusted net revenue | 3,030,100) | 1,645,100) | 1,357,700) | 1,769,100) | 1,712,000) | 1,741,500) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -267.72% | -42.94% | -65.14% | -31.11% | -9.17% | 6.82% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Apple Inc. | — | 22.84% | 21.02% | 21.65% | 23.54% | 22.72% | |
| Arista Networks Inc. | — | 33.36% | 25.07% | 15.69% | 11.24% | 18.37% | |
| Cisco Systems Inc. | -2.94% | -10.31% | -5.29% | 3.40% | 3.80% | 2.94% | |
| Dell Technologies Inc. | -0.12% | -5.26% | -5.14% | -0.39% | 1.65% | -1.17% | |
| Super Micro Computer Inc. | -2.19% | -6.64% | -5.71% | -0.39% | -3.98% | -6.42% | |
Based on: 10-K (reporting date: 2026-06-27), 10-K (reporting date: 2025-06-28), 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenue
= 100 × -8,112,248 ÷ 3,030,100 = -267.72%
3 Click competitor name to see calculations.
An analysis of the economic value added indicates a systemic transition from value creation to substantial value destruction over the observed period. While the company initially generated positive economic returns, subsequent years are characterized by escalating losses and a deteriorating relationship between revenue growth and capital efficiency.
- Economic Profit Trajectory
- Economic profit shifted from a positive position of US$ 118,687 thousand in 2021 to a severe deficit of US$ 8,112,248 thousand by 2026. A consistent downward trend was observed from 2022 through 2024, with a brief period of relative improvement in 2025, followed by a catastrophic collapse in the final year of the period.
- Revenue and Profit Divergence
- Adjusted net revenue exhibited volatility, declining to a low of US$ 1,357,700 thousand in 2024 before rising sharply to US$ 3,030,100 thousand by 2026. However, this revenue expansion in 2026 occurred concurrently with the steepest decline in economic profit, suggesting that the cost of capital or operational expenditures associated with this growth far exceeded the resulting financial gains.
- Economic Profit Margin Erosion
- The economic profit margin deteriorated from 6.82% in 2021 to -267.72% in 2026. The acceleration of the negative margin from 2022 (-9.17%) to 2024 (-65.14%) highlights a period of diminishing returns on invested capital. Despite a marginal recovery to -42.94% in 2025, the final period shows a total breakdown in margin efficiency, indicating that the company is destroying value at a rate significantly higher than its revenue generation capacity.
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