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Why Is Leidos (LDOS) Down 4.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Leidos (LDOS - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Leidos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Leidos Holdings’ second-quarter 2022 adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.55 by 2.6%. The bottom line also improved 4.6% from $1.52 per share registered a year ago.
The company reported GAAP earnings of $1.24 per share, which increased from the year-ago quarter’s earnings of $1.18.
The year-over-year upside can be attributed to the retirement of 0.3 million shares as part of the final settlement of the Accelerated Share Repurchase (ASR) agreement implemented in the first quarter of 2022, which resulted in a decline in share count.
Total Revenues
Leidos Holdings generated total revenues of $3,597 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,514 million by 2.4%.
The top line also improved 4.3% year over year. This increase in revenues can be attributed to growth in all three segments.
Backlog
At the end of second-quarter 2022, the company’s total backlog was $34.72 billion, down from $36.35 billion at first-quarter 2022 end. Of this, $7.09 billion was funded.
Operational Statistics
The total cost of revenues in the quarter increased 3.7% to $3,597 million.
Operating income totaled $271 million compared with the year-ago quarter’s operating income of $269 million.
The operating income margin for the quarter was 7.5% compared with 7.8% in the prior-year quarter.
Interest expenses were $50 million, up 8.7% year over year.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 2% year over year to $2,052 million in the second quarter. This upside can be primarily attributed to the ramp-up of the Navy NGEN-R SMIT contract and the Enduring Indirect Fires Protection Capability (IFPC) contracts.
The segment’s operating income increased to $139 million from the year-ago quarter’s $137 million, with the operating margin being 6.8%.
Health: The segment recorded revenues of $688 million in the second quarter, which rose 7% year over year. The uptick was the result of increased volumes on the DHMSM program and the ramp-up of the Military and Family Life Counseling (MFLC) programs.
Operating income was $126 million compared with the year-ago quarter’s income of $107 million. The operating margin came in at 18.3%.
Civil: Revenues in this segment amounted to $857 million, up 7%. The revenue upside was driven by increased demand for existing programs with the Department of Energy (DoE) and commercial energy providers. Also, growth from the start of the NASA Advanced Enterprise Global Information Technology Solutions program contributed to this unit’s top-line performance.
While operating income declined from $55 million to $38 million, the operating margin was 4.4%.
Financials
LDOS’ cash and cash equivalents as of Jul 1, 2022 was $339 million compared with $727 million as of Dec 31, 2021.
Long-term debt, net of current portion, amounted to $4,023 million as of Jul 1, 2022 compared with $4,593 million as of Dec 31, 2021.
Net cash provided by operating activities during the first six months of 2022 was $133 million compared with $256 million a year ago.
2022 Guidance
Leidos Holdings reaffirmed its 2022 view. The company still expects to generate adjusted earnings in the range of $6.10-$6.50 per share. The Zacks Consensus Estimate for 2022 earnings, pegged at $6.46 per share, lies much above the mid-point of the guidance range.
Leidos Holdings also continues to expect its revenues in the range of $13.9-$14.3 billion. The Zacks Consensus Estimate for 2022 revenues, pegged at $14.18 billion, is above the mid-point of the guided range.
The company’s cash flow from operating activities is still anticipated to be at or above $1 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Leidos has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Leidos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Leidos (LDOS) Down 4.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Leidos (LDOS - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Leidos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Leidos Holdings Q2 Earnings Beat, Revenues Rise Y/Y
Leidos Holdings’ second-quarter 2022 adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.55 by 2.6%. The bottom line also improved 4.6% from $1.52 per share registered a year ago.
The company reported GAAP earnings of $1.24 per share, which increased from the year-ago quarter’s earnings of $1.18.
The year-over-year upside can be attributed to the retirement of 0.3 million shares as part of the final settlement of the Accelerated Share Repurchase (ASR) agreement implemented in the first quarter of 2022, which resulted in a decline in share count.
Total Revenues
Leidos Holdings generated total revenues of $3,597 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,514 million by 2.4%.
The top line also improved 4.3% year over year. This increase in revenues can be attributed to growth in all three segments.
Backlog
At the end of second-quarter 2022, the company’s total backlog was $34.72 billion, down from $36.35 billion at first-quarter 2022 end. Of this, $7.09 billion was funded.
Operational Statistics
The total cost of revenues in the quarter increased 3.7% to $3,597 million.
Operating income totaled $271 million compared with the year-ago quarter’s operating income of $269 million.
The operating income margin for the quarter was 7.5% compared with 7.8% in the prior-year quarter.
Interest expenses were $50 million, up 8.7% year over year.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 2% year over year to $2,052 million in the second quarter. This upside can be primarily attributed to the ramp-up of the Navy NGEN-R SMIT contract and the Enduring Indirect Fires Protection Capability (IFPC) contracts.
The segment’s operating income increased to $139 million from the year-ago quarter’s $137 million, with the operating margin being 6.8%.
Health: The segment recorded revenues of $688 million in the second quarter, which rose 7% year over year. The uptick was the result of increased volumes on the DHMSM program and the ramp-up of the Military and Family Life Counseling (MFLC) programs.
Operating income was $126 million compared with the year-ago quarter’s income of $107 million. The operating margin came in at 18.3%.
Civil: Revenues in this segment amounted to $857 million, up 7%. The revenue upside was driven by increased demand for existing programs with the Department of Energy (DoE) and commercial energy providers. Also, growth from the start of the NASA Advanced Enterprise Global Information Technology Solutions program contributed to this unit’s top-line performance.
While operating income declined from $55 million to $38 million, the operating margin was 4.4%.
Financials
LDOS’ cash and cash equivalents as of Jul 1, 2022 was $339 million compared with $727 million as of Dec 31, 2021.
Long-term debt, net of current portion, amounted to $4,023 million as of Jul 1, 2022 compared with $4,593 million as of Dec 31, 2021.
Net cash provided by operating activities during the first six months of 2022 was $133 million compared with $256 million a year ago.
2022 Guidance
Leidos Holdings reaffirmed its 2022 view. The company still expects to generate adjusted earnings in the range of $6.10-$6.50 per share. The Zacks Consensus Estimate for 2022 earnings, pegged at $6.46 per share, lies much above the mid-point of the guidance range.
Leidos Holdings also continues to expect its revenues in the range of $13.9-$14.3 billion. The Zacks Consensus Estimate for 2022 revenues, pegged at $14.18 billion, is above the mid-point of the guided range.
The company’s cash flow from operating activities is still anticipated to be at or above $1 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Leidos has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Leidos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.