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Leidos Holdings (LDOS) Tops Q3 Earnings, Revises '16 View

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Leidos Holdings, Inc. (LDOS - Free Report) posted third-quarter 2016 adjusted earnings of $1.25 per share, beating the Zacks Consensus Estimate of 95 cents by 31.6%. Reported earnings also surged 71.2% from the year-ago figure of 73 cents.

Total Revenue

Leidos Holdings reported total revenue of $1,868 million in the third quarter, which missed the Zacks Consensus Estimate of $1,886 million by 1%. Reported revenues were, however, up 43.5% year over year.

Backlog

At the end of the third quarter, the company’s backlog of signed business orders was $18.7 billion, of which $5.6 billion was funded. Total backlog includes $454.0 million of reduction due to the adverse impact of foreign currency movements between the U.S. dollar and the British pound.

Operational Statistics

Total cost of revenues in the quarter increased 43.2% to $1,630 million. Operating income was $101.0 million, compared to $94.0 million in the year-ago quarter.

Interest expenses were $28.0 million, up from $15.0 million in the year-ago quarter.

Segment Performance

National Security Solutions: Net sales at the segment improved 4.9% to $921 million from the prior-year figure of $878 million. Operating income improved to $91 million from the year-ago tally of $78 million, with operating margin contracting 100 bps to 9.9%.

Health and Infrastructure Sector: The segment recorded net sales of $328 million in the reported quarter, down 21.5%. Operating income surged 215.4% to $41 million, while operating margin expanded 940 bps to 12.5%.

Information Systems & Global Solutions: Net sales at the segment were $620 million. Operating income was $26 million, while operating margin was 4.2%.

LEIDOS HOLDINGS Price, Consensus and EPS Surprise

 

LEIDOS HOLDINGS Price, Consensus and EPS Surprise | LEIDOS HOLDINGS Quote

Financials

Cash and cash equivalents as of Sep 30, 2016 were $449 million, compared with $656 million as of Jan 1, 2016. Net cash flow from operating activity in the first nine months of 2016 was $284 million, compared with $378 million a year ago.

Guidance

For 2016, the company revised its earnings guidance to the range of $3.50 to $3.60, compared to the prior guidance of $3.15–$3.35.

Revenues are now expected to be between $7.0 million and $7.1 billion, compared to the previous expectation of $6.8−$7.0 billion.

Adjusted EBITDA margin is still expected in the range of 8.5−9.0%. The company also reiterated its projection for cash flows provided by operating activities from continuing operations to $275 million or more.

Peer Releases

Pentagon’s prime contractor Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level, courtesy of strong revenue and operating margin growth.

Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2016 adjusted earnings of $3.35 per share, beating the Zacks Consensus Estimate of $2.81 by 19.2%. Reported earnings were also up 22% from $2.75 recorded in the year-ago quarter.

General Dynamics Corporation (GD - Free Report) announced third-quarter 2016 earnings from continuing operations of $2.48 per share, beating the Zacks Consensus Estimate of $2.37 by 4.6%. Reported earnings were also up 8.8% from $2.28 recorded in the year-ago quarter.

Zacks Rank

Leidos Holdings currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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