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Leidos Holdings (LDOS) Misses on Q4 Earnings, Gives '17 View

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Leidos Holdings, Inc. (LDOS - Free Report) posted fourth-quarter 2016 adjusted earnings of 75 cents per share that missed the Zacks Consensus Estimate of 81 cents by 7.4%. Reported earnings also declined 6.7% from the year-ago figure of 80 cents.

Full-year earnings from continuing operations came in at $3.51 per share, which lagged the Zacks Consensus Estimate of $3.57 by 1.7%. However, earnings improved 18.6% year over year.
 

 

Total Revenue

Leidos Holdings reported total revenue of $2,575 million in the fourth quarter, which surpassed the Zacks Consensus Estimate of $2,571 million by 0.2%. Reported revenues also improved 101% year over year.

Full-year revenues were also up by 38.5% to $7,043 million. Moreover, the reported figure was in line with the Zacks Consensus Estimate.

Backlog

At the end of the 2016, the company’s backlog of signed business orders was $17.74 billion, of which $5.98 billion was funded. At 2015-end, total backlog was $9.90 billion, of which $2.52 billion was funded. The increase was primarily driven by the acquisition of the IS&GS Business.

Operational Statistics

Total cost of revenues in the quarter surged 101.6% to $2,266 million. Operating income was $152.0 million compared with $102.0 million in the year-ago quarter.

Interest expenses were $39.0 million, up from $14.0 million in the year-ago quarter.

Segment Performance

National Security Solutions: Net sales at the segment improved 3.3% to $876 million from the prior-year figure of $848 million. Also, operating income improved to $68 million from the year-ago tally of $65 million, with operating margin contracting 10 basis points (“bps”) to 7.8%.

Health and Infrastructure Sector: The segment recorded net sales of $348 million in the reported quarter, down 19.4%. Operating income was flat at $46 million, while operating margin expanded 260 bps to 13.2%.

Information Systems & Global Solutions: Net sales at the segment were $1,351 million. Operating income was $88 million, while operating margin was 6.5%.

Leidos Holdings, Inc. Price, Consensus and EPS Surprise

 

Leidos Holdings, Inc. Price, Consensus and EPS Surprise | Leidos Holdings, Inc. Quote

Financials

Cash and cash equivalents as of Dec 31, 2016 were $376 million, compared with $656 million as of Jan 1, 2016. Net cash flow from operating activity in 2016 was $446 million, compared with $410 million a year ago.

Guidance

For 2017, the company expects earnings in the range of $3.05 to $3.35.

Revenues are projected to be in between $10.0 billion and $10.4 billion.

Adjusted EBITDA margin is expected in the range of 9.5−10.0%. The company also anticipates cash flows provided by operating activities from continuing operations to be $475 million or more.

Peer Releases

Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) , reported fourth-quarter 2016 earnings from continuing operations of $3.25 per share, which surpassed the Zacks Consensus Estimate of $3.04 by 6.9%. Earnings also increased 23.6% from the year-ago level, courtesy of strong revenues and operating margin growth.

Textron Inc. (TXT - Free Report) reported fourth-quarter 2016 adjusted earnings from continuing operations of 80 cents per share that missed the Zacks Consensus Estimate of 87 cents by 8%.

General Dynamics Corporation (GD - Free Report) reported fourth-quarter 2016 earnings from continuing operations of $2.62 per share, which beat the Zacks Consensus Estimate of $2.54 by 3.1%. Reported earnings were also up 9.2% from $2.40 recorded in the year-ago quarter.

Zacks Rank

Leidos Holdings currently carries 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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