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Reasons to Add Leidos (LDOS) to Your Portfolio Right Now
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Leidos Holdings Inc. (LDOS - Free Report) is well-positioned to benefit from the rising defense budget. The company’s stable financial position and increasing demand for its products will boost performance.
Let’s explore the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
Leidos’ long-term (three-to five-years) earnings growth is pegged at 8.1%.
The Zacks Consensus Estimate for LDOS’ 2023 earnings per share (EPS) is pegged at $7.02, up 5.7% in the past 60 days.
The consensus estimate for 2023 sales stands at $15.25 billion, indicating a year-over-year improvement of 5.9%.
The stock delivered an average earnings surprise of 11.51% in the last four quarters.
Debt Position
The defense, aviation, information technology and biomedical research company has a current ratio of 1.31, better than the industry’s average of 1.12. This implies that it has the financial capability to pay its short-term debt obligations.
Increased Contract Inflow
The widespread geopolitical uncertainty has led the United States to increase its defense spending. During third-quarter 2023, Leidos recorded net bookings worth $7.9 billion. This, in turn, led to a solid backlog of $38.04 billion compared with the prior-year quarter’s figure of $34.15 billion. The fiscal 2024 budget proposal includes $842 billion as funding for the Pentagon.
During the quarter, Leidos was awarded a $7.9 billion indefinite delivery, indefinite quantity contract by the U.S. Army to incorporate artificial intelligence and predictive analytics to increase visibility into operations. Also, the U.S. Army Program Executive Office (“PEO”) Missiles and Space (“M&S”) awarded Leidos $125 million to design, develop, integrate, test and deliver high-fidelity prototype virtualizations of critical computing hardware and software components for PEO M&S weapon systems.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, Leidos’ ROE is 22.27%, higher than the industry average of 10.55%. This indicates that the company has been utilizing its funds more constructively than its aerospace defense equipment industry peers.
Price Performance
In the past year, shares of LDOS have rallied 0.8% against the broader industry’s 7.9% decline.
Image: Bigstock
Reasons to Add Leidos (LDOS) to Your Portfolio Right Now
Leidos Holdings Inc. (LDOS - Free Report) is well-positioned to benefit from the rising defense budget. The company’s stable financial position and increasing demand for its products will boost performance.
Let’s explore the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
Leidos’ long-term (three-to five-years) earnings growth is pegged at 8.1%.
The Zacks Consensus Estimate for LDOS’ 2023 earnings per share (EPS) is pegged at $7.02, up 5.7% in the past 60 days.
The consensus estimate for 2023 sales stands at $15.25 billion, indicating a year-over-year improvement of 5.9%.
The stock delivered an average earnings surprise of 11.51% in the last four quarters.
Debt Position
The defense, aviation, information technology and biomedical research company has a current ratio of 1.31, better than the industry’s average of 1.12. This implies that it has the financial capability to pay its short-term debt obligations.
Increased Contract Inflow
The widespread geopolitical uncertainty has led the United States to increase its defense spending. During third-quarter 2023, Leidos recorded net bookings worth $7.9 billion. This, in turn, led to a solid backlog of $38.04 billion compared with the prior-year quarter’s figure of $34.15 billion. The fiscal 2024 budget proposal includes $842 billion as funding for the Pentagon.
During the quarter, Leidos was awarded a $7.9 billion indefinite delivery, indefinite quantity contract by the U.S. Army to incorporate artificial intelligence and predictive analytics to increase visibility into operations. Also, the U.S. Army Program Executive Office (“PEO”) Missiles and Space (“M&S”) awarded Leidos $125 million to design, develop, integrate, test and deliver high-fidelity prototype virtualizations of critical computing hardware and software components for PEO M&S weapon systems.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, Leidos’ ROE is 22.27%, higher than the industry average of 10.55%. This indicates that the company has been utilizing its funds more constructively than its aerospace defense equipment industry peers.
Price Performance
In the past year, shares of LDOS have rallied 0.8% against the broader industry’s 7.9% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are Virgin Galactic Holdings Inc. (SPCE - Free Report) , TransDigm Group Inc. (TDG - Free Report) and HEICO Corp. (HEI - Free Report) . Each stock currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SPCE boasts a long-term earnings growth rate of 40.3%. The Zacks Consensus Estimate for 2023 sales indicates year-over-year growth of 192.1%.
TDG boasts a long-term earnings growth rate of 16.3%. The Zacks Consensus Estimate for 2023 sales indicates year-over-year growth of 15.2%.
HEI boasts a long-term earnings growth rate of 14%. The Zacks Consensus Estimate for 2023 sales indicates year-over-year growth of 27.1%.