Leidos Holdings, Inc.’s (LDOS - Free Report) fourth-quarter 2019 adjusted earnings of $1.51 per share surpassed the Zacks Consensus Estimate of $1.35 by 11.9%. The bottom line also increased 37.3% from $1.10 a year ago.
Moreover, the company’s GAAP earnings of $1.26 per share increased from $1.25 in the year-ago quarter. This upside can be attributed to solid revenues and operating income.
For 2019, the company reported adjusted earnings of $5.17 per share that surpassed the Zacks Consensus Estimate of $5 by 3.4%. The bottom line increased 18% from $4.38 a year ago.
Total Revenues
Leidos Holdings generated total revenues of $2,954 million in the quarter, which exceeded the Zacks Consensus Estimate of $2,830 million by 4.4%. The top line also improved 11.6% year over year, backed by growth across all segments.
For 2019, the company generated total revenues of $11.09 billion, which exceeded the Zacks Consensus Estimate of $10.97 billion by 1.1%. The full-year top line also improved 8.8% from the prior year.
Backlog
At the end of 2019, the company’s total backlog was $24.1 billion compared with $20.8 billion as of Dec 28, 2018. Of this, $5.4 billion was funded.
Operational Statistics
Total cost of revenues in the fourth quarter increased 10.9% to $2,527 million. Operating income totaled $261 million, compared with $188 million in the year-ago period. The upside was driven by a decrease in selling, general and administrative expenses along with a decline in integration and restructuring costs.
As a result, operating margin expanded to 8.8% from 7.1% in the year-ago quarter.
Interest expenses were $34 million, which came in line with the prior-year quarter figure.
Segmental Performance
Defense Solutions: Net revenues at this segment increased 10.7% to $1,400 million from $1,265 million in the prior-year quarter. This improvement can be primarily attributed to new awards and a net increase in program volumes.
Also, the segment’s operating income improved 55% to $124 million from the year-ago quarter’s income of $80 million. Operating margin expanded 260 basis points (bps) to 8.9%.
Health: The segment recorded revenues of $526 million in the fourth quarter, up 5.8% year over year. The uptick was primarily driven by a net increase in program volumes, new awards and acquisition of IMX Medical Management Services.
Operating income increased 7.4% to $73 million, while operating margin expanded 40 bps to 13.9%.
Civil: Revenues at this segment amounted to $1,028 million, up 16.2% year over year. New awards and a net increase in program volumes led to the upside.
While operating income improved 54% to $97 million, operating margin contracted 230 bps to 9.4%.
Financials
Cash and cash equivalents as of Jan 3, 2020 were $668 million compared with $327 million as of Dec 28, 2018. Net cash provided by operating activities at the end of 2019 amounted to $992 million compared with $768 million a year ago.
Guidance
Leidos Holdings issued its guidance for 2020. The company currently expects adjusted earnings in the range of $5.30-$5.65. The Zacks Consensus Estimate for 2020 earnings is pegged at $5.45, below the mid-point of the company’s projected range.
Moreover, the company expects 2020 revenues of $12.6-$13.0 billion. The Zacks Consensus Estimate for revenues stands at $11.68 billion, lower than the company’s guided range.
Management expects adjusted EBITDA margin of 10-10.2%, while cash flow from operating activities is expected to be or above $1billion.
Zacks Rank
Leidos Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Release
Huntington Ingalls Industries (HII - Free Report) fourth-quarter 2019 earnings of $4.36 per share surpassed the Zacks Consensus Estimate of $4.24 by 2.83%. However, the reported figure declined 11.7% from $4.94 reported a year ago.
Teledyne Technologies (TDY - Free Report) reported fourth-quarter 2019 adjusted earnings of $2.90 per share, which surpassed the Zacks Consensus Estimate of $2.76 by 5.1%. The bottom-line figure came above the guided range of $2.71-$2.76 for the reported quarter.
Lockheed Martin (LMT - Free Report) reported fourth-quarter 2019 earnings of $5.29 per share, which surpassed the Zacks Consensus Estimate of $4.99 by 6%. The bottom line also improved 20.5% from $4.39 in the year-ago quarter.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>
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 >>
Leidos Holdings, Inc.’s (LDOS - Free Report) fourth-quarter 2019 adjusted earnings of $1.51 per share surpassed the Zacks Consensus Estimate of $1.35 by 11.9%. The bottom line also increased 37.3% from $1.10 a year ago.
Moreover, the company’s GAAP earnings of $1.26 per share increased from $1.25 in the year-ago quarter. This upside can be attributed to solid revenues and operating income.
For 2019, the company reported adjusted earnings of $5.17 per share that surpassed the Zacks Consensus Estimate of $5 by 3.4%. The bottom line increased 18% from $4.38 a year ago.
Total Revenues
Leidos Holdings generated total revenues of $2,954 million in the quarter, which exceeded the Zacks Consensus Estimate of $2,830 million by 4.4%. The top line also improved 11.6% year over year, backed by growth across all segments.
For 2019, the company generated total revenues of $11.09 billion, which exceeded the Zacks Consensus Estimate of $10.97 billion by 1.1%. The full-year top line also improved 8.8% from the prior year.
Backlog
At the end of 2019, the company’s total backlog was $24.1 billion compared with $20.8 billion as of Dec 28, 2018. Of this, $5.4 billion was funded.
Operational Statistics
Total cost of revenues in the fourth quarter increased 10.9% to $2,527 million. Operating income totaled $261 million, compared with $188 million in the year-ago period. The upside was driven by a decrease in selling, general and administrative expenses along with a decline in integration and restructuring costs.
As a result, operating margin expanded to 8.8% from 7.1% in the year-ago quarter.
Interest expenses were $34 million, which came in line with the prior-year quarter figure.
Segmental Performance
Defense Solutions: Net revenues at this segment increased 10.7% to $1,400 million from $1,265 million in the prior-year quarter. This improvement can be primarily attributed to new awards and a net increase in program volumes.
Also, the segment’s operating income improved 55% to $124 million from the year-ago quarter’s income of $80 million. Operating margin expanded 260 basis points (bps) to 8.9%.
Health: The segment recorded revenues of $526 million in the fourth quarter, up 5.8% year over year. The uptick was primarily driven by a net increase in program volumes, new awards and acquisition of IMX Medical Management Services.
Operating income increased 7.4% to $73 million, while operating margin expanded 40 bps to 13.9%.
Civil: Revenues at this segment amounted to $1,028 million, up 16.2% year over year. New awards and a net increase in program volumes led to the upside.
While operating income improved 54% to $97 million, operating margin contracted 230 bps to 9.4%.
Financials
Cash and cash equivalents as of Jan 3, 2020 were $668 million compared with $327 million as of Dec 28, 2018. Net cash provided by operating activities at the end of 2019 amounted to $992 million compared with $768 million a year ago.
Guidance
Leidos Holdings issued its guidance for 2020. The company currently expects adjusted earnings in the range of $5.30-$5.65. The Zacks Consensus Estimate for 2020 earnings is pegged at $5.45, below the mid-point of the company’s projected range.
Moreover, the company expects 2020 revenues of $12.6-$13.0 billion. The Zacks Consensus Estimate for revenues stands at $11.68 billion, lower than the company’s guided range.
Management expects adjusted EBITDA margin of 10-10.2%, while cash flow from operating activities is expected to be or above $1billion.
Zacks Rank
Leidos Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Release
Huntington Ingalls Industries (HII - Free Report) fourth-quarter 2019 earnings of $4.36 per share surpassed the Zacks Consensus Estimate of $4.24 by 2.83%. However, the reported figure declined 11.7% from $4.94 reported a year ago.
Teledyne Technologies (TDY - Free Report) reported fourth-quarter 2019 adjusted earnings of $2.90 per share, which surpassed the Zacks Consensus Estimate of $2.76 by 5.1%. The bottom-line figure came above the guided range of $2.71-$2.76 for the reported quarter.
Lockheed Martin (LMT - Free Report) reported fourth-quarter 2019 earnings of $5.29 per share, which surpassed the Zacks Consensus Estimate of $4.99 by 6%. The bottom line also improved 20.5% from $4.39 in the year-ago quarter.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>
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 >>
Get the latest research report on LMT - FREE
Get the latest research report on HII - FREE
Get the latest research report on TDY - FREE
Get the latest research report on LDOS - FREE