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Leidos (LDOS) Up 3.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Leidos (LDOS - Free Report) . Shares have added about 3.5% 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’ second-quarter 2021 adjusted earnings of $1.52 per share missed the Zacks Consensus Estimate of $1.57 by 3.2%. The bottom line also declined 1.9% from $1.55 per share registered a year ago.
The company’s GAAP earnings of $1.18 per share improved from the year-ago quarter’s $1.06.
Total Revenues
Leidos Holdings generated total revenues of $3,448 million in the quarter under consideration, which exceeded the Zacks Consensus Estimate of $3,339 million by 3.3%. The top line also improved 18.3% year over year. This increase in revenues is primarily attributable to growth across all its reportable segments.
Backlog
At the end of the reported quarter, the company’s total backlog was $33.5 billion, up 9% year over year. Of this, $7.16 billion was funded.
Operational Statistics
Total cost of revenues in the quarter increased 16.6% to $2,950 million. Operating income totaled $269 million compared with the year-ago quarter’s income of $249 million.
Non-GAAP operating income margin for the quarter was 7.8% compared with 8.5% in the prior-year quarter.
Interest expenses summed $46 million compared with $41 million in the prior-year quarter.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 14% to $2,004 million from the prior-year quarter’s $1,757 million. This upside can be primarily attributed to the start-up of the Navy Next Generation IT contract and increased weapons systems development.
The segment’s operating income escalated to $137 million from the year-ago quarter’s $119 million, with the operating margin at 6.8%.
Health: The segment recorded revenues of $645 million in the second quarter, which soared 62% year over year. The revenue increase primarily came as a result of the surge in veterans' disability examinations after the pause due to the COVID-19 pandemic as well as increased volumes on the Defense Healthcare Management System Modernization (DHMSM) program and the ramp up of new programs such as the Military and Family Life Counseling (MFLC) program.
Operating income was $107 million compared to the year-ago quarter’s income of $1 million, while operating margin expanded 1630 bps to 16.6%.
Civil: Revenues in this segment amounted to $799 million, up 5%. This uptick was primarily attributable to the increased demand for large programs such as Hanford Site Integration.
While operating income declined 29.5% to $55 million, operating margin contracted 340 bps to 6.9%.
Financials
Cash and cash equivalents as of Jul 2, 2021, were $338 million compared with $524 million as of Jan 1, 2021.
Long-term debt, net of current portion, amounted to $4,639 million as of Jul 2, 2021, compared with $4,644 million as of Jan 1, 2021.
Net cash provided by operating activities in the first half of 2021 was $256 million compared with $794 million a year ago.
2021 Guidance
Leidos Holdings reaffirmed its view for 2021. The company continues to expect adjusted earnings in the $6.35-$6.65 per share range. The Zacks Consensus Estimate for 2021 earnings, pegged at $6.35 per share, is below the midpoint of the company’s projected view.
Leidos Holdings expects revenues of $13.7-$14.1 billion this year, unchanged from the previous guidance. The Zacks Consensus Estimate for 2021 revenues, pegged at $13.87 billion, is below the midpoint of the company-guided range.
The company’s cash flow from operating activities is anticipated to be at or above $875 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Leidos has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Leidos has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Leidos (LDOS) Up 3.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Leidos (LDOS - Free Report) . Shares have added about 3.5% 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 Q2 Earnings Miss, Revenues Rise Y/Y
Leidos Holdings’ second-quarter 2021 adjusted earnings of $1.52 per share missed the Zacks Consensus Estimate of $1.57 by 3.2%. The bottom line also declined 1.9% from $1.55 per share registered a year ago.
The company’s GAAP earnings of $1.18 per share improved from the year-ago quarter’s $1.06.
Total Revenues
Leidos Holdings generated total revenues of $3,448 million in the quarter under consideration, which exceeded the Zacks Consensus Estimate of $3,339 million by 3.3%. The top line also improved 18.3% year over year. This increase in revenues is primarily attributable to growth across all its reportable segments.
Backlog
At the end of the reported quarter, the company’s total backlog was $33.5 billion, up 9% year over year. Of this, $7.16 billion was funded.
Operational Statistics
Total cost of revenues in the quarter increased 16.6% to $2,950 million. Operating income totaled $269 million compared with the year-ago quarter’s income of $249 million.
Non-GAAP operating income margin for the quarter was 7.8% compared with 8.5% in the prior-year quarter.
Interest expenses summed $46 million compared with $41 million in the prior-year quarter.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 14% to $2,004 million from the prior-year quarter’s $1,757 million. This upside can be primarily attributed to the start-up of the Navy Next Generation IT contract and increased weapons systems development.
The segment’s operating income escalated to $137 million from the year-ago quarter’s $119 million, with the operating margin at 6.8%.
Health: The segment recorded revenues of $645 million in the second quarter, which soared 62% year over year. The revenue increase primarily came as a result of the surge in veterans' disability examinations after the pause due to the COVID-19 pandemic as well as increased volumes on the Defense Healthcare Management System Modernization (DHMSM) program and the ramp up of new programs such as the Military and Family Life Counseling (MFLC) program.
Operating income was $107 million compared to the year-ago quarter’s income of $1 million, while operating margin expanded 1630 bps to 16.6%.
Civil: Revenues in this segment amounted to $799 million, up 5%. This uptick was primarily attributable to the increased demand for large programs such as Hanford Site Integration.
While operating income declined 29.5% to $55 million, operating margin contracted 340 bps to 6.9%.
Financials
Cash and cash equivalents as of Jul 2, 2021, were $338 million compared with $524 million as of Jan 1, 2021.
Long-term debt, net of current portion, amounted to $4,639 million as of Jul 2, 2021, compared with $4,644 million as of Jan 1, 2021.
Net cash provided by operating activities in the first half of 2021 was $256 million compared with $794 million a year ago.
2021 Guidance
Leidos Holdings reaffirmed its view for 2021. The company continues to expect adjusted earnings in the $6.35-$6.65 per share range. The Zacks Consensus Estimate for 2021 earnings, pegged at $6.35 per share, is below the midpoint of the company’s projected view.
Leidos Holdings expects revenues of $13.7-$14.1 billion this year, unchanged from the previous guidance. The Zacks Consensus Estimate for 2021 revenues, pegged at $13.87 billion, is below the midpoint of the company-guided range.
The company’s cash flow from operating activities is anticipated to be at or above $875 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Leidos has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Leidos has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.