Shares of the wonderfully named Lumentum Holdings (LITE 3.36%), a specialist in lasers used for fiber optical communications, tumbled 17.2% through noon ET on Thursday, despite beating analyst targets for its fiscal second quarter of 2024 this morning.

Heading into its Q2 earnings report, analysts had forecast the telecommunications equipment company would earn $0.30 per share on sales of $363.3 million. In fact, Lumentum earned $0.32 per share on sales of $366.8 million -- a small beat to be sure, but still a beat.

Lumentum sales and earnings

But if Lumentum beat earnings this morning, why is its stock falling this afternoon? Well, the sad truth is that Lumentum's results -- while better than expected -- were still far from good.

Fiscal Q2 2024 sales that exceeded expectations still fell 27.5% in comparison to Q2 2023. Gross margin fell off a cliff, down 670 basis points to 17.4%. Operating losses swelled. And on the bottom line, Lumentum's earnings as calculated according to generally accepted accounting principles (GAAP) were not a profit of $0.32 per share -- that was a non-GAAP (adjusted) number -- but rather a loss of $1.47 per share.

This was roughly triple last year's Q2 loss of $0.47 per share.

Is the stock worth owning?

CEO Alan Lowe blames "sluggish" carrier capital expenditures for the poor results. Worse, he warned that this situation is likely to continue "through the balance of fiscal 2024," as Lumentum's customers continue to "digest" all the inventory they've built up in prior years.

Fiscal third-quarter sales are expected to range from $350 million to $380 million -- so $365 million at the midpoint, or basically flat quarter over quarter. Non-GAAP profits will range from $0.20 to $0.35 per share, which implies they will decline as well. Lumentum gave no guidance for what its actual GAAP earnings will be -- but given the huge disparity between non-GAAP and GAAP results in Q2, I have little confidence that Q3 earnings will be positive.

Long story short, with no trailing GAAP profits -- and thus no P/E -- a rather high multiple to forward earnings, and both sales and earnings looking flat to down for the foreseeable future, I see little compelling reason to own Lumentum stock at this time.