Why Lumentum Stock Flashed Red on Tuesday
Shares of Lumentum Holdings (NASDAQ: LITE) tumbled 12.6% as of 12:40 p.m. ET on Tuesday, even though the laser maker released financial results that beat on both the top and bottom lines earlier in the day.
For its fiscal first quarter of 2023, Lumentum reported adjusted earnings of $1.69 per share and quarterly sales of $506.8 million, instead of the respective $1.56 and $503.6 million that Wall Street had expected. Turns out, it wasn't the company's earnings that were the problem -- it was its guidance.
Actually, that's not 100% correct. Although Lumentum did beat on earnings and said demand among its customers remains "robust," the company's profit margins in Q1 were still kind of a disappointment when calculated according to generally accepted accounting principles (GAAP). The gross profit margin for the quarter declined by more than 12 full percentage points, and operating margin plummeted 23 points, to just 2.7%.
Source Fool.com
