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What's in Store for Leidos Holdings' (LDOS) Q1 Earnings?

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Leidos Holdings, Inc. (LDOS - Free Report) is scheduled to release first-quarter 2021 results on May 4, before market open. In the last reported quarter, the company delivered an earnings surprise of 1.87%.

Moreover, Leidos Holdings delivered an earnings surprise of 15.08%, on average, in the trailing four quarters.

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

Factors at Play

Positive synergies from acquisitions made in recent quarters are expected to have boosted the company’s first-quarter revenues. Also, contract growth and additional new business in recent times has been bolstering its top line performance, lately. A similar trend is anticipated to have benefited Leidos Holdings’ revenues in the soon-to-be-reported quarter.

In the fourth quarter, the company witnessed record levels of revenues and backlog, coupled with margin expansion and further balance-sheet optimization. Evidently, its portfolio continues to grow and positions it for strong market growth in 2021, which in turn is likely to have boosted the first-quarter top-line performance.

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

Notably, the Zacks Consensus Estimate for quarterly revenues is pegged at $3.21 billion, which indicates a rise of 11.2% from the year-ago quarter.

Leidos Holdings has been, of late, witnessing high staff utilization, increased cost efficiencies on certain programs, reduced indirect costs and strong program execution across its entire business. Together, these are expected to have boosted its quarterly margin, which, in turn might have ramped up the company’s earnings.

The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $1.49, which suggests an improvement of 25.2% from the year-ago quarter.

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 #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Leidos Holdings, Inc. Price and EPS Surprise

Stock to Consider

Here is a defense company you may want to consider, as it has the right combination of elements to post an earnings beat in the upcoming release:

Triumph Group, Inc. (TGI - Free Report) has an Earnings ESP of +9.80% and carries a Zacks Rank #3.

Recent Defense Releases

Lockheed Martin Corp. (LMT - Free Report) reported first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32.

Raytheon Technologies Corporation’s (RTX - Free Report) first-quarter 2021 adjusted earnings per share of 90 cents outpaced the Zacks Consensus Estimate of 88 cents.

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