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 8.3% 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 8.3% 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 catalysts.
Leidos Holdings Beats on Q2 Earnings, Ups '24 EPS View
Leidos Holdings’ second-quarter 2024 adjusted earnings of $2.63 per share beat the Zacks Consensus Estimate of $2.26 by 16.4%. The bottom line also increased 46.1% from $1.80 registered in the prior-year quarter.
The year-over-year upside was driven by increased volumes and higher earned incentives on managed health services and improved cost control across the company.
LDOS reported GAAP earnings of $2.37 per share, up from the prior-year quarter’s level of $1.50.
Total Revenues
Total revenues of $4.13 billion beat the Zacks Consensus Estimate of $4.04 million by 2.2%.
The top line also improved 7.7% year over year, driven by increased demand across all customer segments, especially for managed health services.
Backlog
The company recorded a total backlog of $36.49 billion, down from $36.57 billion in the first quarter of 2024. Of this amount, $8.02 billion was funded.
Operational Statistics
The cost of revenues increased 4.8% year over year to $3,427 million. The company reported an operating income of $475 million compared with $331 million in the year-ago quarter.
The adjusted operating margin was 12.7% compared with 10.1% in the prior-year period.
Interest expenses totaled $51 million, down 8.9% year over year.
Segmental Performance
National Security and Digital: Net revenues in this segment improved 1.2% year over year to $1.81 billion. The increase can be attributed to increased volumes from the Sentinel contract, Defense Enclave Services (“DES”) program and several contracted research as well as development efforts.
This segment’s adjusted operating income increased to $188 million from the year-ago quarter’s level of $183 million. The segment’s adjusted operating margin was 10.4%, up 20 basis points (bps) from the prior-year quarter’s 10.2%.
Health & Civil: The segment recorded revenues of $1.26 billion, up 22.1% year over year. This improvement can be attributed to increased volumes and case complexity within the managed health services business.
This unit’s adjusted operating income totaled $314 million compared with $145 million in the year-ago quarter. The segment’s adjusted operating margin was 24.9%, up 1,090 bps year over year.
Commercial & International: Revenues in this segment amounted to $561 million, up 3.7% year over year. The upside was driven by increased deliveries of security products and higher volumes within the commercial energy and Australian IT businesses.
This segment recorded an adjusted operating income of $42 million compared with $23 million in the year-ago period. The adjusted operating margin was 8.3%, up 360 bps year over year.
Defense Systems: Revenues in this segment amounted to $495 million, up 6.2% year over year. The upside was driven by increased volumes within the airborne surveillance and reconnaissance and hypersonics businesses.
This segment recorded an adjusted operating income of $4 million compared with $45 million in the year-ago period. The adjusted operating margin was 0.7%, down 750 bps year over year.
Financials
Cash and cash equivalents as of Jun 28, 2024, totaled $823 million compared with $777 million as of Dec 29, 2023.
The long-term debt, net of the current portion, amounted to $4.11 billion as of Jun 28, 2024, compared with $4.66 billion as of Dec 29, 2023.
Net cash flow from operating activities totaled $437 million at the end of the second quarter of 2024 compared with $66 million recorded a year ago.
2024 Guidance
Leidos Holdings has partially raised its 2024 guidance. The company now expects to generate adjusted earnings in the range of $8.60-$9.00 per share, up from the prior guidance of $8.40-$8.80. The Zacks Consensus Estimate for earnings is pegged at $8.75 per share, lower than the mid-point of the company’s projected range.
LDOS currently expects 2024 revenues to be in the band of $16.10-$16.40 billion, narrower than the earlier guidance of $16.0-$16.4 billion. The Zacks Consensus Estimate for revenues is pegged at $16.12 billion, lower than the mid-point of the company’s new guided range.
The company continues to expect cash flow from operating activities of approximately $1.3 billion in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.36% due to these changes.
VGM Scores
At this time, Leidos has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Leidos has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Leidos is part of the Zacks Aerospace - Defense industry. Over the past month, Lockheed Martin (LMT - Free Report) , a stock from the same industry, has gained 4.1%. The company reported its results for the quarter ended June 2024 more than a month ago.
Lockheed reported revenues of $18.12 billion in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $7.11 for the same period compares with $6.73 a year ago.
Lockheed is expected to post earnings of $6.40 per share for the current quarter, representing a year-over-year change of -5.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
Lockheed has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Leidos (LDOS) Up 8.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Leidos (LDOS - Free Report) . Shares have added about 8.3% 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 catalysts.
Leidos Holdings Beats on Q2 Earnings, Ups '24 EPS View
Leidos Holdings’ second-quarter 2024 adjusted earnings of $2.63 per share beat the Zacks Consensus Estimate of $2.26 by 16.4%. The bottom line also increased 46.1% from $1.80 registered in the prior-year quarter.
The year-over-year upside was driven by increased volumes and higher earned incentives on managed health services and improved cost control across the company.
LDOS reported GAAP earnings of $2.37 per share, up from the prior-year quarter’s level of $1.50.
Total Revenues
Total revenues of $4.13 billion beat the Zacks Consensus Estimate of $4.04 million by 2.2%.
The top line also improved 7.7% year over year, driven by increased demand across all customer segments, especially for managed health services.
Backlog
The company recorded a total backlog of $36.49 billion, down from $36.57 billion in the first quarter of 2024. Of this amount, $8.02 billion was funded.
Operational Statistics
The cost of revenues increased 4.8% year over year to $3,427 million. The company reported an operating income of $475 million compared with $331 million in the year-ago quarter.
The adjusted operating margin was 12.7% compared with 10.1% in the prior-year period.
Interest expenses totaled $51 million, down 8.9% year over year.
Segmental Performance
National Security and Digital: Net revenues in this segment improved 1.2% year over year to $1.81 billion. The increase can be attributed to increased volumes from the Sentinel contract, Defense Enclave Services (“DES”) program and several contracted research as well as development efforts.
This segment’s adjusted operating income increased to $188 million from the year-ago quarter’s level of $183 million. The segment’s adjusted operating margin was 10.4%, up 20 basis points (bps) from the prior-year quarter’s 10.2%.
Health & Civil: The segment recorded revenues of $1.26 billion, up 22.1% year over year. This improvement can be attributed to increased volumes and case complexity within the managed health services business.
This unit’s adjusted operating income totaled $314 million compared with $145 million in the year-ago quarter. The segment’s adjusted operating margin was 24.9%, up 1,090 bps year over year.
Commercial & International: Revenues in this segment amounted to $561 million, up 3.7% year over year. The upside was driven by increased deliveries of security products and higher volumes within the commercial energy and Australian IT businesses.
This segment recorded an adjusted operating income of $42 million compared with $23 million in the year-ago period. The adjusted operating margin was 8.3%, up 360 bps year over year.
Defense Systems: Revenues in this segment amounted to $495 million, up 6.2% year over year. The upside was driven by increased volumes within the airborne surveillance and reconnaissance and hypersonics businesses.
This segment recorded an adjusted operating income of $4 million compared with $45 million in the year-ago period. The adjusted operating margin was 0.7%, down 750 bps year over year.
Financials
Cash and cash equivalents as of Jun 28, 2024, totaled $823 million compared with $777 million as of Dec 29, 2023.
The long-term debt, net of the current portion, amounted to $4.11 billion as of Jun 28, 2024, compared with $4.66 billion as of Dec 29, 2023.
Net cash flow from operating activities totaled $437 million at the end of the second quarter of 2024 compared with $66 million recorded a year ago.
2024 Guidance
Leidos Holdings has partially raised its 2024 guidance. The company now expects to generate adjusted earnings in the range of $8.60-$9.00 per share, up from the prior guidance of $8.40-$8.80. The Zacks Consensus Estimate for earnings is pegged at $8.75 per share, lower than the mid-point of the company’s projected range.
LDOS currently expects 2024 revenues to be in the band of $16.10-$16.40 billion, narrower than the earlier guidance of $16.0-$16.4 billion. The Zacks Consensus Estimate for revenues is pegged at $16.12 billion, lower than the mid-point of the company’s new guided range.
The company continues to expect cash flow from operating activities of approximately $1.3 billion in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.36% due to these changes.
VGM Scores
At this time, Leidos has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Leidos has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Leidos is part of the Zacks Aerospace - Defense industry. Over the past month, Lockheed Martin (LMT - Free Report) , a stock from the same industry, has gained 4.1%. The company reported its results for the quarter ended June 2024 more than a month ago.
Lockheed reported revenues of $18.12 billion in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $7.11 for the same period compares with $6.73 a year ago.
Lockheed is expected to post earnings of $6.40 per share for the current quarter, representing a year-over-year change of -5.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
Lockheed has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.