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Will High Interest Expense Hurt Leidos' (LDOS) Q4 Earnings?
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Leidos Holdings, Inc. (LDOS - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Feb 13, before market open.
Leidos has a four-quarter average earnings surprise of 11.51%. Strong revenue performance across the majority of its business segments is likely to have contributed to the overall performance of the company in the fourth quarter. However, higher interest expenses might have hurt earnings.
Defense Solution’s Performance May Remain Solid
Increased sales volumes for defensive hypersonics and LDOS’ Australian Airborne Solutions business are likely to have bolstered the Defense Solution’s revenue performance in the to-be-reported quarter.
The Zacks Consensus Estimate for the Defense Solutions segment’s revenues in the fourth quarter is pegged at $2,161.5 million, indicating growth of 4.5% from that reported in the year-ago quarter.
Increased demand for engineering support to commercial energy companies must have added impetus to Civil’s revenue performance in the fourth quarter. However, lower volumes from security products might have had some negative impact on the overall top line.
The Zacks Consensus Estimate for the segment’s revenues in the fourth quarter is pegged at $936.3 million, implying a decline of 0.2% from the year-ago quarter’s level.
Health Unit to Show Strength
Higher volumes of Social Security Administration’s IT work and the increased demand for medical examinations are likely to have continued to lift this segment’s performance in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for the Health unit’s fourth-quarter revenues is pegged at $716.8 million, indicating an improvement of 3.7% from the year-ago quarter’s figure.
Q4 Estimates
The expected strong financial results in the majority of LDOS’ operational divisions must have aided the overall top line in the fourth quarter. The Zacks Consensus Estimate for revenues is pegged at $3.79 billion, indicating an increase of 2.5% from the year-ago quarter’s level.
A strong top line and cost-cutting initiatives are likely to have boosted Leidos' bottom line in the quarter to be reported. However, an unfavorable business mix and higher interest expense might have negatively impacted LDOS’ overall earnings performance.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.73 per share, indicating a decline of 5.5% from the prior-year quarter’s reported figure.
Projections Suggest Growth
The strong demand for Leidos products can be gauged by its backlog strength. Our model suggests Leidos’ backlog to increase 2.2% to $36.58 billion in the fourth quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for LDOS 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. This is the case here, as you will see below.
Leidos has an Earnings ESP of +1.88% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are other two defense companies that you may want to consider as these too have the right combination of elements to post an earnings beat this reporting cycle.
CAE delivered a four-quarter average earnings surprise of 15.97%. The consensus estimate for fiscal third-quarter earnings is pegged at 18 cents per share, while that for sales is pinned at $806 million.
Heico (HEI - Free Report) is expected to release first-quarter fiscal 2024 results soon. HEI has an Earnings ESP of +0.39% and a Zacks Rank #3 at present.
Heico delivered a four-quarter average earnings surprise of 7.78%. The Zacks Consensus Estimate for HEI’s fiscal first-quarter earnings is pegged at 73 cents per share, while that for sales is pinned at $875.4 million.
A Recent Defense Release
Spirit AeroSystems Holdings, Inc. (SPR - Free Report) reported fourth-quarter 2023 adjusted earnings of 48 cents per share, which missed the Zacks Consensus Estimate of $1.33 by 63.9%. However, the bottom line improved from a loss of $1.46 per share incurred in the year-ago quarter.
Total revenues of $1,813 million surpassed the Zacks Consensus Estimate of $1,739 million by 4.3%. Also, the top line rose 37% on a year-over-year basis, driven by higher production deliveries on Commercial programs and higher Defense and Space and Aftermarket revenues.
Image: Bigstock
Will High Interest Expense Hurt Leidos' (LDOS) Q4 Earnings?
Leidos Holdings, Inc. (LDOS - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Feb 13, before market open.
Leidos has a four-quarter average earnings surprise of 11.51%. Strong revenue performance across the majority of its business segments is likely to have contributed to the overall performance of the company in the fourth quarter. However, higher interest expenses might have hurt earnings.
Defense Solution’s Performance May Remain Solid
Increased sales volumes for defensive hypersonics and LDOS’ Australian Airborne Solutions business are likely to have bolstered the Defense Solution’s revenue performance in the to-be-reported quarter.
The Zacks Consensus Estimate for the Defense Solutions segment’s revenues in the fourth quarter is pegged at $2,161.5 million, indicating growth of 4.5% from that reported in the year-ago quarter.
Leidos Holdings, Inc. Price and EPS Surprise
Leidos Holdings, Inc. price-eps-surprise | Leidos Holdings, Inc. Quote
Civil’s Revenues to Reflect Dismal Result
Increased demand for engineering support to commercial energy companies must have added impetus to Civil’s revenue performance in the fourth quarter. However, lower volumes from security products might have had some negative impact on the overall top line.
The Zacks Consensus Estimate for the segment’s revenues in the fourth quarter is pegged at $936.3 million, implying a decline of 0.2% from the year-ago quarter’s level.
Health Unit to Show Strength
Higher volumes of Social Security Administration’s IT work and the increased demand for medical examinations are likely to have continued to lift this segment’s performance in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for the Health unit’s fourth-quarter revenues is pegged at $716.8 million, indicating an improvement of 3.7% from the year-ago quarter’s figure.
Q4 Estimates
The expected strong financial results in the majority of LDOS’ operational divisions must have aided the overall top line in the fourth quarter. The Zacks Consensus Estimate for revenues is pegged at $3.79 billion, indicating an increase of 2.5% from the year-ago quarter’s level.
A strong top line and cost-cutting initiatives are likely to have boosted Leidos' bottom line in the quarter to be reported. However, an unfavorable business mix and higher interest expense might have negatively impacted LDOS’ overall earnings performance.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.73 per share, indicating a decline of 5.5% from the prior-year quarter’s reported figure.
Projections Suggest Growth
The strong demand for Leidos products can be gauged by its backlog strength. Our model suggests Leidos’ backlog to increase 2.2% to $36.58 billion in the fourth quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for LDOS 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. This is the case here, as you will see below.
Leidos has an Earnings ESP of +1.88% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are other two defense companies that you may want to consider as these too have the right combination of elements to post an earnings beat this reporting cycle.
CAE Inc. (CAE - Free Report) is slated to release third-quarter fiscal 2024 results on Feb 14. CAE has an Earnings ESP of +6.32% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CAE delivered a four-quarter average earnings surprise of 15.97%. The consensus estimate for fiscal third-quarter earnings is pegged at 18 cents per share, while that for sales is pinned at $806 million.
Heico (HEI - Free Report) is expected to release first-quarter fiscal 2024 results soon. HEI has an Earnings ESP of +0.39% and a Zacks Rank #3 at present.
Heico delivered a four-quarter average earnings surprise of 7.78%. The Zacks Consensus Estimate for HEI’s fiscal first-quarter earnings is pegged at 73 cents per share, while that for sales is pinned at $875.4 million.
A Recent Defense Release
Spirit AeroSystems Holdings, Inc. (SPR - Free Report) reported fourth-quarter 2023 adjusted earnings of 48 cents per share, which missed the Zacks Consensus Estimate of $1.33 by 63.9%. However, the bottom line improved from a loss of $1.46 per share incurred in the year-ago quarter.
Total revenues of $1,813 million surpassed the Zacks Consensus Estimate of $1,739 million by 4.3%. Also, the top line rose 37% on a year-over-year basis, driven by higher production deliveries on Commercial programs and higher Defense and Space and Aftermarket revenues.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.