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Leidos Holdings (LDOS) Beats on Q2 Earnings, Revenues Lag

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Leidos Holdings, Inc. (LDOS - Free Report) posted second-quarter 2018 adjusted earnings of $1.12 per share, beating the Zacks Consensus Estimate of $1.05 by 6.7%. The reported number also increased 7.7% from the year-ago figure of $1.04.

The company reported GAAP earnings per share of 94 cents in the reported quarter, which increased 46.9% from the year-ago figure of 64 cents.

Total Revenues

Leidos Holdings posted total revenues of $2,529 million in the quarter, which lagged the Zacks Consensus Estimate of $2,563 million by 1.3%. The reported figure also declined 1.6% year over year.

Backlog

At the end of second-quarter 2018, the company’s backlog of signed business orders was $18.3 billion, of which $5.4 billion was funded. Total backlog at the end of the first quarter was $17.6 billion, of which $4.6 billion was funded.

Operational Statistics

Total cost of revenues in the reported quarter declined 1.7% to $2,152 million. Operating income was $199 million compared with $166 million in the year-ago quarter.

Operating margin increased to 7.9% from 6.5% in the prior year quarter, primarily due to favorable contract mix along with decreases in amortization of intangible assets as well as integration and restructuring costs.

Interest expenses were $35 million, up from $34 million in the year-ago quarter.

Segment Performance

Defense Solutions: Net sales at the segment improved 1% to $1,256 million from the prior-year figure of $1,243 million. The increase was primarily attributable to new awards, timing of revenue recognition on certain contracts and improved program performance.

Also, operating income improved to $93 million from the year-ago income of $63 million, with operating margin expanding 230 basis points (bps) to 7.4%.

Health: The segment recorded net sales of $451 million in the reported quarter, down 0.7%. The decrease was primarily attributable to the completion of certain contracts.

Operating income also decreased 8.1% to $68 million along with operating margin contracting 120 bps to 15.1%.

Civil: Net sales at the segment were $822 million, down 6.1%. The decrease was primarily due to the completion of certain contracts and a net decrease in program volumes.

Operating income also decreased 7.6% to $61 million along with operating margin contracting 10 bps to 7.4%.

Leidos Holdings, Inc. Price, Consensus and EPS Surprise

 

Leidos Holdings, Inc. Price, Consensus and EPS Surprise | Leidos Holdings, Inc. Quote

Financials

Cash and cash equivalents as of Jun 29, 2018 were $303 million compared with $390 million as of Dec 29, 2017. Net cash provided by operating activities in the second quarter was $271 million, compared with $166 million a year ago.

2018 Guidance

For 2018, Leidos Holdings reaffirmed its guidance. The company continues to expect earnings in the range of $4.15 to $4.50 per share. Revenues are still expected between $10.25 billion and $10.65 billion.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin have been reaffirmed at the range of 10.1-10.4%. The company has also reiterated its projection of cash flow provided by operating activities from continuing operations at $675 million or more.

Zacks Rank

Leidos Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin (LMT - Free Report) reported second-quarter 2018 adjusted earnings of $4.31 per share, beating the Zacks Consensus Estimate of $3.89 by 10.8%.

Textron (TXT - Free Report) reported second-quarter 2018 earnings from continuing operations of 87 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 24.3%. The bottom line also increased 52.6% from 57 cents in the year-ago quarter.

Hexcel Corporation (HXL - Free Report) reported second-quarter 2018 adjusted earnings of 75 cents per share, which missed the Zacks Consensus Estimate of 76 cents by 1.3%. However, the bottom line improved 11.9% from the
prior-year figure of 67 cents.

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