A month has gone by since the last earnings report for Leidos (LDOS Quick QuoteLDOS - Free Report) . Shares have added about 4.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Leidos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Leidos Holdings Q3 Earnings Beat, Revenues Rise Y/Y

Leidos Holdings third-quarter 2022 adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.56 by 1.9%. However, the bottom line declined 11.7% from the $1.80 per share registered a year ago.

The company reported GAAP earnings of $1.17 per share, which decreased from the year-ago quarter’s earnings of $3.68.

Total Revenues

Leidos Holdings generated total revenues of $3,600 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,543.9 million by 1.6%. The top line also improved 4% year over year.

Backlog

At the end of the third quarter of 2022, the company’s total backlog was $35.02 billion, up from $34.72 billion at the second-quarter 2022 end. Of this, $7.43 billion was funded.

Operational Statistics

The total cost of revenues in the quarter increased by 5.2% to $3,095 million.

The operating income totaled $342 million compared with the year-ago quarter’s operating income of $376 million.

The operating income margin for the quarter was 9.5% compared with 10.8% in the prior-year quarter.

Interest expenses were $50 million, up 6.4% year over year.

Segmental Performance

Defense Solutions: Net revenues in this segment improved 3.3% year over year to $2,067 million in the third quarter. The increase can be attributed to higher Navy NGEN-R SMIT and various force protection programs.

However, the segment’s operating income decreased to $169 million from the year-ago quarter’s $176 million, with the operating margin being 8.1%. The decrease in the operating income was due to a program mix and investments in prototype development contracts.

Health: The segment recorded revenues of $659 million in the third quarter, which declined 3.4% year over year. The decrease in revenues was the result of increased volumes on the DHMSM program, the ramp-up of the Military and the increased backlog of disability exams caused by COVID-19.

The operating income was $99 million compared with the year-ago quarter’s income of $141 million. The operating margin came in at 15%.

Civil: Revenues in this segment amounted to $874 million, up 10.4%. The upside was driven by the ramp-up of the NASA AEGIS program.

While the operating income increased from $76 million to $96 million, the operating margin was 11%.

Financials

LDOS’ cash and cash equivalents as of Sep 30, 2022 were $807 million compared with $727 million as of Dec 31, 2021.

The long-term debt, net of the current portion, amounted to $3,975 million as of Sep 30, 2022, compared with $4,593 million as of Dec 31, 2021.

Net cash provided by operating activities during the first nine months of 2022 was $881 million compared with $821 million a year ago.

2022 Guidance

Leidos Holdings updated its 2022 view. The company now expects to generate adjusted earnings in the range of $6.20-$6.40 per share compared with the prior expectation in the band of $6.10-$6.50 per share.

The Zacks Consensus Estimate for 2022 earnings, pegged at $6.35 per share, is higher than the midpoint of the guidance range.

Leidos Holdings now expects revenues in the range of $14.2-$14.4 billion compared with the prior guidance range of $13.9-$14.3 billion. The Zacks Consensus Estimate for 2022 revenues, pegged at $14.21 billion, is lower than the midpoint of the guided range.

The company maintained its cash flow from operating activities guidance and anticipates it to be at or more than $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 strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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.

Performance of an Industry Player

Leidos belongs to the Zacks Aerospace - Defense industry. Another stock from the same industry, Boeing (BA Quick QuoteBA - Free Report) , has gained 21.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Boeing reported revenues of $15.96 billion in the last reported quarter, representing a year-over-year change of +4.4%. EPS of -$6.18 for the same period compares with -$0.60 a year ago.

Boeing is expected to post earnings of $0.40 per share for the current quarter, representing a year-over-year change of +105.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +4.4%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Boeing. Also, the stock has a VGM Score of C.