Back to top

Image: Bigstock

Leidos Holdings (LDOS) to Post Q3 Earnings: What's in Store?

Read MoreHide Full Article

Leidos Holdings, Inc. (LDOS - Free Report) is scheduled to release third-quarter 2021 results on Nov 2, before market open.
 
In the last reported quarter, the company delivered a negative earnings surprise of 3.18%. However, Leidos Holdings delivered an earnings surprise of 8.10%, on average, in the trailing four quarters.

Let’s discuss how things have shaped up ahead of the announcement.

Factors at Play

A smooth flow of contracts in the past few quarters is expected to have boosted organic revenue growth for Leidos in the third quarter.  

On the other hand, positive synergies from acquisitions made in the past few quarters must have contributed to the company’s quarterly top-line performance.

Leidos Holdings, Inc. Price and EPS Surprise

Leidos Holdings, Inc. Price and EPS Surprise

Leidos Holdings, Inc. price-eps-surprise | Leidos Holdings, Inc. Quote

In August, Leidos completed the transition for the Department of the Navy's enterprise information technology (IT) networks. These networks provide IT services to more than 650,000 uniformed and civilian professionals who use them daily at more than 1,500 locations across the United States and worldwide. This is likely to positively impact the company’s quarterly results.

The Zacks Consensus Estimate for quarterly revenues is pegged at $3.58 billion, which indicates a rise of 10.5% from the year-ago quarter.

In terms of margin, factors like strong program management, higher volumes on some fixed-price programs and better direct labor utilization are expected to have boosted Leidos’ margin during the third quarter. This, in turn, might have bolstered the company’s quarterly earnings performance.

The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $1.60, which suggests an improvement of 8.8% from the year-ago quarter.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Leidos Holdings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Leidos Holdings carries a Zacks Rank #3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are a couple of defense companies you may want to consider, as these have the right combination of elements to post an earnings beat this season:

Transdigm Group (TDG - Free Report) has an Earnings ESP of +0.36% and a Zacks Rank #2.

Huntington Ingalls (HII - Free Report) has an Earnings ESP of +3.59% and a Zacks Rank #2.

A Recent Defense Release

Raytheon Technologies Corporation’s (RTX - Free Report) third-quarter 2021 adjusted earnings per share (EPS) of $1.26 outpaced the Zacks Consensus Estimate of $1.07 by 17.8%.

 

Published in