Leidos Holdings, Inc.’s (LDOS - Free Report) fourth-quarter 2018 adjusted earnings of $1.10 per share surpassed the Zacks Consensus Estimate of $1.07 by 2.8%. The bottom line also increased 26.4% from 87 cents per share registered a year ago.
Moreover, the company’s GAAP earnings of $1.25 per share surged 79% from the year-ago figure of 70 cents.
The year-over-year bottom-line improvement can be attributed to solid operating income growth.
For 2018, the company’s adjusted earnings came in at $4.38 per share, which exceeded the Zacks Consensus Estimate of $4.36 by 0.5%. The reported figure also improved 17.7% from the year-ago tally.
Total Revenues
Leidos Holdings generated total revenues of $2,647 million in the quarter under consideration, which missed the Zacks Consensus Estimate of $2,666 million by 0.7%. However, the top line improved 5.2% year over year. For 2018, the company’s total revenues amounted to $10.19 billion, which missed the Zacks Consensus Estimate of $10.21 billion by a whisker.
Nevertheless, the reported figure inched up 0.2% year over year.
Backlog
At the end of 2018, the company’s backlog of signed business orders was $20.8 billion, of which $6.4 billion was funded.
Operational Statistics
In the reported quarter, total cost of revenues increased by 4.5% to $2,278 million. Operating income was $188 million compared with $101million in the year-ago period, primarily owing to decline in acquisitions, integration and restructuring costs, and lower amortization of intangible assets.
As a result, the operating margin expanded to 7.1% from 4% in the prior-year quarter.
Interest expenses summed $34 million compared with $35 million in the year-ago quarter.
Segmental Performance
Defense Solutions: Net revenues at this segment improved 3.6% to $1,265 million from the prior-year figure of $1,221 million. This upside can be primarily attributed to new awards that this segment received in the quarter under review.
However, the segment’s operating income declined to $81 million from the year-ago income of $85 million with the operating margin having contracted60 basis points (bps) to 6.4%.
Health: The segment recorded revenues of $497 million in the fourth quarter, up 12.7% year over year. The improvement was primarily driven by a net increase in program volumes.
While operating income improved 54.5% to $68 million, operating margin expanded 370 bps to 13.7%.
Civil: Revenues at this segment amounted to $885 million, up 3.6%. This uptick was mainly driven by expanded volumes from new programs.
Operating income also rose 10.7% to $93 million, while operating margin expanded 40 bps to 7%.
Financials
Cash and cash equivalents as of Dec 31, 2018, were $327 million compared with $390 million as of Dec 29, 2017. Net cash provided by operating activities in 2018 was $768 million compared with $526 million a year ago.
2019 Guidance
Leidos Holdings issued an outlook for 2019. The company currently expects its adjusted earnings to be in the range of $4.25-$4.60 per share on revenues of $10.5-$10.9 billion.
The Zacks Consensus Estimates for the company’s 2019 earnings and revenues are pegged at $4.71 and $10.63 billion, respectively. While the bottom line estimate surpasses the company provided guidance, the top line estimate lies near the mid-point of the company's provided outlook.
Moreover, the company projects its cash flow from operating activities to be $725 million, at 2019 end.
Zacks Rank
Leidos Holdings has a Zacks Rank #4 (Sell).
Recent Defense Releases
FLIR Systems Inc.’s fourth-quarter 2018 adjusted earnings of 62 cents per share surpassed the Zacks Consensus Estimate of 60 cents by 3.3%. The company carries a Zacks Rank #3 (Hold).
Textron (TXT - Free Report) reported fourth-quarter 2018 adjusted earnings of $1.15 per share from continuing operations, which exceeded the Zacks Consensus Estimate of 98 cents by 17.3%. The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hexcel Corporation’s (HXL - Free Report) fourth-quarter 2018 adjusted earnings of 82 cents per share outpaced the Zacks Consensus Estimate of 80 cents by 2.5%. The company carries a Zacks Rank #2 (Buy).
Zacks' Top 10 Stocks for 2019
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Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Leidos Holdings, Inc.’s (LDOS - Free Report) fourth-quarter 2018 adjusted earnings of $1.10 per share surpassed the Zacks Consensus Estimate of $1.07 by 2.8%. The bottom line also increased 26.4% from 87 cents per share registered a year ago.
Moreover, the company’s GAAP earnings of $1.25 per share surged 79% from the year-ago figure of 70 cents.
The year-over-year bottom-line improvement can be attributed to solid operating income growth.
For 2018, the company’s adjusted earnings came in at $4.38 per share, which exceeded the Zacks Consensus Estimate of $4.36 by 0.5%. The reported figure also improved 17.7% from the year-ago tally.
Total Revenues
Leidos Holdings generated total revenues of $2,647 million in the quarter under consideration, which missed the Zacks Consensus Estimate of $2,666 million by 0.7%. However, the top line improved 5.2% year over year. For 2018, the company’s total revenues amounted to $10.19 billion, which missed the Zacks Consensus Estimate of $10.21 billion by a whisker.
Nevertheless, the reported figure inched up 0.2% year over year.
Backlog
At the end of 2018, the company’s backlog of signed business orders was $20.8 billion, of which $6.4 billion was funded.
Operational Statistics
In the reported quarter, total cost of revenues increased by 4.5% to $2,278 million. Operating income was $188 million compared with $101million in the year-ago period, primarily owing to decline in acquisitions, integration and restructuring costs, and lower amortization of intangible assets.
As a result, the operating margin expanded to 7.1% from 4% in the prior-year quarter.
Interest expenses summed $34 million compared with $35 million in the year-ago quarter.
Segmental Performance
Defense Solutions: Net revenues at this segment improved 3.6% to $1,265 million from the prior-year figure of $1,221 million. This upside can be primarily attributed to new awards that this segment received in the quarter under review.
However, the segment’s operating income declined to $81 million from the year-ago income of $85 million with the operating margin having contracted60 basis points (bps) to 6.4%.
Health: The segment recorded revenues of $497 million in the fourth quarter, up 12.7% year over year. The improvement was primarily driven by a net increase in program volumes.
While operating income improved 54.5% to $68 million, operating margin expanded 370 bps to 13.7%.
Civil: Revenues at this segment amounted to $885 million, up 3.6%. This uptick was mainly driven by expanded volumes from new programs.
Operating income also rose 10.7% to $93 million, while operating margin expanded 40 bps to 7%.
Financials
Cash and cash equivalents as of Dec 31, 2018, were $327 million compared with $390 million as of Dec 29, 2017. Net cash provided by operating activities in 2018 was $768 million compared with $526 million a year ago.
2019 Guidance
Leidos Holdings issued an outlook for 2019. The company currently expects its adjusted earnings to be in the range of $4.25-$4.60 per share on revenues of $10.5-$10.9 billion.
The Zacks Consensus Estimates for the company’s 2019 earnings and revenues are pegged at $4.71 and $10.63 billion, respectively. While the bottom line estimate surpasses the company provided guidance, the top line estimate lies near the mid-point of the company's provided outlook.
Moreover, the company projects its cash flow from operating activities to be $725 million, at 2019 end.
Zacks Rank
Leidos Holdings has a Zacks Rank #4 (Sell).
Recent Defense Releases
FLIR Systems Inc.’s fourth-quarter 2018 adjusted earnings of 62 cents per share surpassed the Zacks Consensus Estimate of 60 cents by 3.3%. The company carries a Zacks Rank #3 (Hold).
Textron (TXT - Free Report) reported fourth-quarter 2018 adjusted earnings of $1.15 per share from continuing operations, which exceeded the Zacks Consensus Estimate of 98 cents by 17.3%. The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hexcel Corporation’s (HXL - Free Report) fourth-quarter 2018 adjusted earnings of 82 cents per share outpaced the Zacks Consensus Estimate of 80 cents by 2.5%. The company carries a Zacks Rank #2 (Buy).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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