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Leidos Holdings (LDOS) Q4 Earnings Beat Estimates, Revenues Miss
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Leidos Holdings, Inc.’s (LDOS - Free Report) fourth-quarter 2020 adjusted earnings of $1.63 per share surpassed the Zacks Consensus Estimate of $1.60 by 1.9%. The bottom line also increased 7.9% from $1.51 a year ago.
Moreover, the company’s GAAP earnings of $1.37 per share increased from $1.26 in the year-ago quarter. This upside can be attributed to solid revenues and operating income.
For 2020, the company reported adjusted earnings of $5.83 per share that surpassed the Zacks Consensus Estimate of $5.81 by 0.3%. The bottom line increased 12.8% from $5.17 a year ago.
Total Revenues
Leidos Holdings generated total revenues of $3,252 million in the quarter, which missed the Zacks Consensus Estimate of $3,400 million by 4.4%. The top line, however, improved 10.1% year over year, backed by growth across its Defense Solutions and Civil segment.
For 2020, the company generated total revenues of $12.3 billion, which missed the Zacks Consensus Estimate of $12.44 billion by 1.1%. The full-year top line also improved 10.8% from the prior year.
Backlog
At the end of 2020, the company’s total backlog was $31.9 billion compared with $24.1 billion as of Dec 28, 2019. Of this, $6.6 billion was funded.
Operational Statistics
Total cost of revenues in the fourth quarter increased 9.3% to $2,761 million.
Operating income totaled $299 million compared with $261 million in the year-ago period.
Operating income margin increased to 9.2% from 8.8% in the prior-year quarter.
Interest expenses were $46 million, higher than the prior-year quarter’s $34 million.
Segmental Performance
Defense Solutions: Net revenues in this segment increased 16.5% to $1,928 million from $1,655 million in the prior-year quarter. The revenue growth was primarily attributable to $937 million of revenues related to the acquisition of Dynetics, program wins and a net increase in materials volume on certain programs.
Also, the segment’s operating income came in line with the prior year’s figure of $147 million. Operating margin contracted 130 basis points (bps) to 7.6%.
Health: The segment recorded revenues of $513 million in the fourth quarter, down 2.5% year over year. The revenue decline was primarily attributable to the timing of program execution due to COVID-19 and the impact from the sale of its health staff augmentation business.
Operating income increased 17.8% to $86 million, while operating margin expanded 290 bps to 16.8%.
Civil: Revenues in this segment amounted to $811 million, up 4.9% year over year. The revenue growth was primarily attributable to $243 million of revenues related to the acquisition of the SD&A businesses and program wins.
While operating income improved 20.3% to $89 million, operating margin expanded 140 bps to 11%.
Financials
Cash and cash equivalents as of Jan 1, 2021, were $524 million compared with $668 million as of Jan 3, 2020.
Net cash provided by operating activities at the end of 2020 amounted to $1,334 million compared with $992 million a year ago.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Leidos Holdings issued its guidance for 2021. The company currently expects adjusted earnings of $6.15-$6.45 per share. The Zacks Consensus Estimate for 2021 earnings is pegged at $6.40 per share, higher than the midpoint of the company’s projected range.
Moreover, the company expects 2021 revenues of $13.7-$14.1 billion. The Zacks Consensus Estimate for revenues stands at $13.93 billion, higher than the midpoint of the company’s guided range.
Management expects adjusted EBITDA margin of 10.3-10.5%, while cash flow from operating activities is expected to be at or above $850 million.
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.
General Dynamics Corporation (GD - Free Report) reported fourth-quarter 2020 earnings from continuing operations of $3.49 per share, which missed the Zacks Consensus Estimate of $3.55 by 1.7%.
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Leidos Holdings (LDOS) Q4 Earnings Beat Estimates, Revenues Miss
Leidos Holdings, Inc.’s (LDOS - Free Report) fourth-quarter 2020 adjusted earnings of $1.63 per share surpassed the Zacks Consensus Estimate of $1.60 by 1.9%. The bottom line also increased 7.9% from $1.51 a year ago.
Moreover, the company’s GAAP earnings of $1.37 per share increased from $1.26 in the year-ago quarter. This upside can be attributed to solid revenues and operating income.
For 2020, the company reported adjusted earnings of $5.83 per share that surpassed the Zacks Consensus Estimate of $5.81 by 0.3%. The bottom line increased 12.8% from $5.17 a year ago.
Total Revenues
Leidos Holdings generated total revenues of $3,252 million in the quarter, which missed the Zacks Consensus Estimate of $3,400 million by 4.4%. The top line, however, improved 10.1% year over year, backed by growth across its Defense Solutions and Civil segment.
For 2020, the company generated total revenues of $12.3 billion, which missed the Zacks Consensus Estimate of $12.44 billion by 1.1%. The full-year top line also improved 10.8% from the prior year.
Backlog
At the end of 2020, the company’s total backlog was $31.9 billion compared with $24.1 billion as of Dec 28, 2019. Of this, $6.6 billion was funded.
Operational Statistics
Total cost of revenues in the fourth quarter increased 9.3% to $2,761 million.
Operating income totaled $299 million compared with $261 million in the year-ago period.
Operating income margin increased to 9.2% from 8.8% in the prior-year quarter.
Interest expenses were $46 million, higher than the prior-year quarter’s $34 million.
Segmental Performance
Defense Solutions: Net revenues in this segment increased 16.5% to $1,928 million from $1,655 million in the prior-year quarter. The revenue growth was primarily attributable to $937 million of revenues related to the acquisition of Dynetics, program wins and a net increase in materials volume on certain programs.
Also, the segment’s operating income came in line with the prior year’s figure of $147 million. Operating margin contracted 130 basis points (bps) to 7.6%.
Health: The segment recorded revenues of $513 million in the fourth quarter, down 2.5% year over year. The revenue decline was primarily attributable to the timing of program execution due to COVID-19 and the impact from the sale of its health staff augmentation business.
Operating income increased 17.8% to $86 million, while operating margin expanded 290 bps to 16.8%.
Civil: Revenues in this segment amounted to $811 million, up 4.9% year over year. The revenue growth was primarily attributable to $243 million of revenues related to the acquisition of the SD&A businesses and program wins.
While operating income improved 20.3% to $89 million, operating margin expanded 140 bps to 11%.
Financials
Cash and cash equivalents as of Jan 1, 2021, were $524 million compared with $668 million as of Jan 3, 2020.
Net cash provided by operating activities at the end of 2020 amounted to $1,334 million compared with $992 million a year ago.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote
Guidance
Leidos Holdings issued its guidance for 2021. The company currently expects adjusted earnings of $6.15-$6.45 per share. The Zacks Consensus Estimate for 2021 earnings is pegged at $6.40 per share, higher than the midpoint of the company’s projected range.
Moreover, the company expects 2021 revenues of $13.7-$14.1 billion. The Zacks Consensus Estimate for revenues stands at $13.93 billion, higher than the midpoint of the company’s guided range.
Management expects adjusted EBITDA margin of 10.3-10.5%, while cash flow from operating activities is expected to be at or above $850 million.
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 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.
General Dynamics Corporation (GD - Free Report) reported fourth-quarter 2020 earnings from continuing operations of $3.49 per share, which missed the Zacks Consensus Estimate of $3.55 by 1.7%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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