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Reasons to Add Leidos (LDOS) to Your Portfolio Right Now
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Leidos Holdings Inc. (LDOS - Free Report) is well-positioned to benefit from the favorable U.S. defense budget. The company’s stable financial position and solid growth estimates should further boost its performance.
Let us focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections
Leidos’ long-term (three to five years) earnings growth is pegged at 8.1%.
The Zacks Consensus Estimate for LDOS’ 2024 earnings per share is pegged at $7.75, up 2.8% in the past 60 days. The estimate reflects a 6.2% improvement from the 2023 reported figure.
The consensus estimate for LDOS’ 2024 sales is $15.97 billion, indicating a year-over-year improvement of 3.5%.
The stock delivered an average earnings surprise of 11.85% in the last four quarters.
Debt Position
Leidos has a current ratio of 1.34, better than the industry’s average of 1.12. The company’s current ratio being more than 1, implies that it has the financial capability to pay its short-term debt obligations.
LDOS’ time-to-interest earned ratio at the end of fourth-quarter 2023 was 2.90, which increased from 2.5 at the end of the third quarter of 2023.
Strong Order Wins to Boost Growth
Increased contract wins backed by the solid demand for its products have been serving as a primary growth driver for Leidos Holdings. It ended 2023 with a total backlog of $36.96 billion. The company’s net bookings during 2023 amounted to $16.5 billion.
The widespread geopolitical uncertainty, along with the increased fiscal 2024 budget of $842 billion for the Pentagon, is driving Leidos’ Defense Solutions segment. Notably, Defense Solutions represented 56% of total revenues in 2023 and witnessed a 6% year-over-year improvement.
Return on Equity (ROE)
ROE is a measure of a company’s financial performance and shows how it is utilizing its funds. Leidos’ current ROE is 22.9%, better than the industry’s average of 10.5%, which indicates that the company is using its funds more efficiently than its peers.
Price Performance
In the past year, LDOS shares have rallied 38.1% against the industry’s 1.3% decline.
Textron boasts a long-term earnings growth rate of 10.1%. The Zacks Consensus Estimate for 2024 sales is pegged at $14.64 billion, implying a year-over-year improvement of 7%.
Safran boasts a long-term earnings growth rate of 30.2%. The Zacks Consensus Estimate for 2024 sales is pegged at $29.41 billion, implying a year-over-year improvement of 43%.
The Zacks Consensus Estimate for Spire’s 2024 sales is pegged at $140.73 million, implying an improvement of 33.1% from the 2023 figure. It delivered an average earnings surprise of 28.01% in the last four quarters.
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Reasons to Add Leidos (LDOS) to Your Portfolio Right Now
Leidos Holdings Inc. (LDOS - Free Report) is well-positioned to benefit from the favorable U.S. defense budget. The company’s stable financial position and solid growth estimates should further boost its performance.
Let us focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections
Leidos’ long-term (three to five years) earnings growth is pegged at 8.1%.
The Zacks Consensus Estimate for LDOS’ 2024 earnings per share is pegged at $7.75, up 2.8% in the past 60 days. The estimate reflects a 6.2% improvement from the 2023 reported figure.
The consensus estimate for LDOS’ 2024 sales is $15.97 billion, indicating a year-over-year improvement of 3.5%.
The stock delivered an average earnings surprise of 11.85% in the last four quarters.
Debt Position
Leidos has a current ratio of 1.34, better than the industry’s average of 1.12. The company’s current ratio being more than 1, implies that it has the financial capability to pay its short-term debt obligations.
LDOS’ time-to-interest earned ratio at the end of fourth-quarter 2023 was 2.90, which increased from 2.5 at the end of the third quarter of 2023.
Strong Order Wins to Boost Growth
Increased contract wins backed by the solid demand for its products have been serving as a primary growth driver for Leidos Holdings. It ended 2023 with a total backlog of $36.96 billion. The company’s net bookings during 2023 amounted to $16.5 billion.
The widespread geopolitical uncertainty, along with the increased fiscal 2024 budget of $842 billion for the Pentagon, is driving Leidos’ Defense Solutions segment. Notably, Defense Solutions represented 56% of total revenues in 2023 and witnessed a 6% year-over-year improvement.
Return on Equity (ROE)
ROE is a measure of a company’s financial performance and shows how it is utilizing its funds. Leidos’ current ROE is 22.9%, better than the industry’s average of 10.5%, which indicates that the company is using its funds more efficiently than its peers.
Price Performance
In the past year, LDOS shares have rallied 38.1% against the industry’s 1.3% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks in the same industry are Textron Inc. (TXT - Free Report) , Safran SA (SAFRY - Free Report) and Spire Global Inc. (SPIR - Free Report) . TXT sports a Zacks Rank #1 (Strong Buy), and SAFRY and SPIR carry a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Textron boasts a long-term earnings growth rate of 10.1%. The Zacks Consensus Estimate for 2024 sales is pegged at $14.64 billion, implying a year-over-year improvement of 7%.
Safran boasts a long-term earnings growth rate of 30.2%. The Zacks Consensus Estimate for 2024 sales is pegged at $29.41 billion, implying a year-over-year improvement of 43%.
The Zacks Consensus Estimate for Spire’s 2024 sales is pegged at $140.73 million, implying an improvement of 33.1% from the 2023 figure. It delivered an average earnings surprise of 28.01% in the last four quarters.