Newsletter Subscription

A Laser Focus World newsletter subscription is free to qualified professionals:

The Daily Beam

Showcases the newest content from Laser Focus World, including photonics- and optics-based applications, components, research, and trends. (Daily)

Product Watch

The latest in products within the photonics industry. (9x per year)

Bio & Life Sciences Product Watch

The latest in products within the biophotonics industry. (4x per year)

Laser Processing Product Watch

The latest in products within the laser processing industry. (3x per year)

3 Reasons to Sell LXFR and 1 Stock to Buy Instead

By: StockStory

October 01, 2025 at 00:04 AM EDT

LXFR Cover Image

Luxfer trades at $13.90 per share and has stayed right on track with the overall market, gaining 18.5% over the last six months. At the same time, the S&P 500 has returned 18.8%.

Is there a buying opportunity in Luxfer, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Do We Think Luxfer Will Underperform?

We don't have much confidence in Luxfer. Here are three reasons there are better opportunities than LXFR and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Luxfer’s sales grew at a sluggish 2% compounded annual growth rate over the last five years. This was below our standards.

2. Free Cash Flow Margin Dropping

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Luxfer’s margin dropped by 7.8 percentage points over the last five years. This along with its unexciting margin put the company in a tough spot, and shareholders are likely hoping it can reverse course. If the trend continues, it could signal it’s becoming a more capital-intensive business. Luxfer’s free cash flow margin for the trailing 12 months was 8.9%.

Luxfer Trailing 12-Month Free Cash Flow Margin

3. New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Luxfer’s ROIC has unfortunately decreased. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

We cheer for all companies making their customers lives easier, but in the case of Luxfer, we’ll be cheering from the sidelines. That said, the stock currently trades at 12.6× forward P/E (or $13.90 per share). While this valuation is reasonable, we don’t see a big opportunity at the moment. There are more exciting stocks to buy at the moment. We’d recommend looking at a top digital advertising platform riding the creator economy.

Stocks We Would Buy Instead of Luxfer

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.

About Us

Laser Focus World Membership

Magazine Subscription

Newsletter Subscription

The Daily Beam

Product Watch

Bio & Life Sciences Product Watch

Laser Processing Product Watch

Get Published!

Photonics Hot List

Following the Photons: A Photonics Podcast

Social Media

Meet the Laser Focus World Team

Editorial

Sales

Editorial Advisory Board