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What's in Store for Leidos Holdings (LDOS) in Q4 Earnings?

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Leidos Holdings, Inc. (LDOS - Free Report) is scheduled to release fourth-quarter 2020 results on Feb 23, before market open. In the last-reported quarter, the company delivered an earnings surprise of 17.60%.

Moreover, Leidos Holdings delivered an earnings surprise of 17.57%, on average, in the trailing four quarters.

Let’s discuss how things have shaped ahead of the announcement.

Factors at Play

Positive synergies from recent acquisitions are expected to have boosted the company’s fourth-quarter revenues. Also, contract growth in recent times along with the company’s ability to accelerate the reopening of medical exam clinics have been bolstering its top line performance lately. A similar trend is expected to have benefited Leidos Holdings’ revenues in the soon-to-be-reported quarter.

Leidos Holdings, Inc. Price and EPS Surprise

Leidos Holdings, Inc. Price and EPS Surprise

Leidos Holdings, Inc. price-eps-surprise | Leidos Holdings, Inc. Quote

Further, Dianetics acquisition and the strong execution of new programs are projected to have boosted revenues from its Defense Solutions segment, which constitutes almost half of the company’s total revenues.  

Notably, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $3.40 billion, which indicates a rise of 15.1% from the year-ago quarter’s reported figure.

Per the company’s earlier announced expectation, Leidos Holdings’ business returned to normalized run rates and favorable mix in the fourth quarter.  Consequently, high staff utilization, reduced indirect costs and strong program execution across the entire business are expected to have boosted its quarterly margin. This in turn is expected to have boosted its earnings in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at $1.60, which indicates an improvement of 6% from the year-ago quarter’s reported figure.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Leidos Holdings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But this is not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Leidos Holdings carries a Zacks Rank #2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

A Stock to Consider

Here is a company from the broader Aerospace sector you may want to consider as it has the right combination of elements to post an earnings beat in its upcoming release:

Virgin Galactic Holdings, Inc. (SPCE - Free Report)   has an Earnings ESP of +9.68% and a Zacks Rank #3.

Recent Defense Releases

Lockheed Martin Corp. (LMT - Free Report) reported fourth-quarter 2020 earnings from continuing operations of $6.38 per share, which came in line with the Zacks Consensus Estimate.

Hexcel Corporation (HXL - Free Report) reported fourth-quarter 2020 loss of 18 cents per share, in line with the Zacks Consensus Estimate.

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