We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Leidos (LDOS) Up 5% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Leidos (LDOS - Free Report) . Shares have added about 5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Leidos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Leidos Holdings Q4 Earnings Beat Estimates, Revenues Miss
Leidos Holdings fourth-quarter 2020 adjusted earnings of $1.63 per share surpassed the Zacks Consensus Estimate of $1.60 by 1.9%. The bottom line also increased 7.9% from $1.51 a year ago.
Moreover, the company’s GAAP earnings of $1.37 per share increased from $1.26 in the year-ago quarter. This upside can be attributed to solid revenues and operating income.
For 2020, the company reported adjusted earnings of $5.83 per share that surpassed the Zacks Consensus Estimate of $5.81 by 0.3%. The bottom line increased 12.8% from $5.17 a year ago.
Total Revenues
Leidos Holdings generated total revenues of $3,252 million in the quarter, which missed the Zacks Consensus Estimate of $3,400 million by 4.4%. The top line, however, improved 10.1% year over year, backed by growth across its Defense Solutions and Civil segment.
For 2020, the company generated total revenues of $12.3 billion, which missed the Zacks Consensus Estimate of $12.44 billion by 1.1%. The full-year top line also improved 10.8% from the prior year.
Backlog
At the end of 2020, the company’s total backlog was $31.9 billion compared with $24.1 billion as of Dec 28, 2019. Of this, $6.6 billion was funded.
Operational Statistics
Total cost of revenues in the fourth quarter increased 9.3% to $2,761 million.
Operating income totaled $299 million compared with $261 million in the year-ago period.
Operating income margin increased to 9.2% from 8.8% in the prior-year quarter.
Interest expenses were $46 million, higher than the prior-year quarter’s $34 million.
Segmental Performance
Defense Solutions: Net revenues in this segment increased 16.5% to $1,928 million from $1,655 million in the prior-year quarter. The revenue growth was primarily attributable to $937 million of revenues related to the acquisition of Dynetics, program wins and a net increase in materials volume on certain programs.
Also, the segment’s operating income came in line with the prior year’s figure of $147 million. Operating margin contracted 130 basis points (bps) to 7.6%.
Health: The segment recorded revenues of $513 million in the fourth quarter, down 2.5% year over year. The revenue decline was primarily attributable to the timing of program execution due to COVID-19 and the impact from the sale of its health staff augmentation business.
Operating income increased 17.8% to $86 million, while operating margin expanded 290 bps to 16.8%.
Civil: Revenues in this segment amounted to $811 million, up 4.9% year over year. The revenue growth was primarily attributable to $243 million of revenues related to the acquisition of the SD&A businesses and program wins.
While operating income improved 20.3% to $89 million, operating margin expanded 140 bps to 11%.
Financials
Cash and cash equivalents as of Jan 1, 2021, were $524 million compared with $668 million as of Jan 3, 2020.
Net cash provided by operating activities at the end of 2020 amounted to $1,334 million compared with $992 million a year ago.
Guidance
Leidos Holdings issued its guidance for 2021. The company currently expects adjusted earnings of $6.15-$6.45 per share. The Zacks Consensus Estimate for 2021 earnings is pegged at $6.40 per share, higher than the midpoint of the company’s projected range.
Moreover, the company expects 2021 revenues of $13.7-$14.1 billion. The Zacks Consensus Estimate for revenues stands at $13.93 billion, higher than the midpoint of the company’s guided range.
Management expects adjusted EBITDA margin of 10.3-10.5%, while cash flow from operating activities is expected to be at or above $850 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Leidos has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Leidos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Leidos (LDOS) Up 5% Since Last Earnings Report?
It has been about a month since the last earnings report for Leidos (LDOS - Free Report) . Shares have added about 5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Leidos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Leidos Holdings Q4 Earnings Beat Estimates, Revenues Miss
Leidos Holdings fourth-quarter 2020 adjusted earnings of $1.63 per share surpassed the Zacks Consensus Estimate of $1.60 by 1.9%. The bottom line also increased 7.9% from $1.51 a year ago.
Moreover, the company’s GAAP earnings of $1.37 per share increased from $1.26 in the year-ago quarter. This upside can be attributed to solid revenues and operating income.
For 2020, the company reported adjusted earnings of $5.83 per share that surpassed the Zacks Consensus Estimate of $5.81 by 0.3%. The bottom line increased 12.8% from $5.17 a year ago.
Total Revenues
Leidos Holdings generated total revenues of $3,252 million in the quarter, which missed the Zacks Consensus Estimate of $3,400 million by 4.4%. The top line, however, improved 10.1% year over year, backed by growth across its Defense Solutions and Civil segment.
For 2020, the company generated total revenues of $12.3 billion, which missed the Zacks Consensus Estimate of $12.44 billion by 1.1%. The full-year top line also improved 10.8% from the prior year.
Backlog
At the end of 2020, the company’s total backlog was $31.9 billion compared with $24.1 billion as of Dec 28, 2019. Of this, $6.6 billion was funded.
Operational Statistics
Total cost of revenues in the fourth quarter increased 9.3% to $2,761 million.
Operating income totaled $299 million compared with $261 million in the year-ago period.
Operating income margin increased to 9.2% from 8.8% in the prior-year quarter.
Interest expenses were $46 million, higher than the prior-year quarter’s $34 million.
Segmental Performance
Defense Solutions: Net revenues in this segment increased 16.5% to $1,928 million from $1,655 million in the prior-year quarter. The revenue growth was primarily attributable to $937 million of revenues related to the acquisition of Dynetics, program wins and a net increase in materials volume on certain programs.
Also, the segment’s operating income came in line with the prior year’s figure of $147 million. Operating margin contracted 130 basis points (bps) to 7.6%.
Health: The segment recorded revenues of $513 million in the fourth quarter, down 2.5% year over year. The revenue decline was primarily attributable to the timing of program execution due to COVID-19 and the impact from the sale of its health staff augmentation business.
Operating income increased 17.8% to $86 million, while operating margin expanded 290 bps to 16.8%.
Civil: Revenues in this segment amounted to $811 million, up 4.9% year over year. The revenue growth was primarily attributable to $243 million of revenues related to the acquisition of the SD&A businesses and program wins.
While operating income improved 20.3% to $89 million, operating margin expanded 140 bps to 11%.
Financials
Cash and cash equivalents as of Jan 1, 2021, were $524 million compared with $668 million as of Jan 3, 2020.
Net cash provided by operating activities at the end of 2020 amounted to $1,334 million compared with $992 million a year ago.
Guidance
Leidos Holdings issued its guidance for 2021. The company currently expects adjusted earnings of $6.15-$6.45 per share. The Zacks Consensus Estimate for 2021 earnings is pegged at $6.40 per share, higher than the midpoint of the company’s projected range.
Moreover, the company expects 2021 revenues of $13.7-$14.1 billion. The Zacks Consensus Estimate for revenues stands at $13.93 billion, higher than the midpoint of the company’s guided range.
Management expects adjusted EBITDA margin of 10.3-10.5%, while cash flow from operating activities is expected to be at or above $850 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Leidos has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Leidos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.