Yahoo Finance Leidos (LDOS) Down 5.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Leidos (LDOS). Shares have lost about 5.8% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Leidos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Leidos Holdings Q4 Earnings Beat, Revenues Rise Y/Y
Leidos Holdings’ fourth-quarter 2022 adjusted earnings of $1.83 per share beat the Zacks Consensus Estimate of $1.61 by 13.7%. The bottom line also improved 17% from the $1.56 per share registered a year ago.
The company reported GAAP earnings of $1.28 per share, which increased from the year-ago quarter’s earnings of $1.23. For the full-year 2022, LDOS reported adjusted earnings of $6.60 per share, which surpassed the Zacks Consensus Estimate of $6.37.
Total Revenues
Leidos Holdings generated total revenues of $3,697 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,609 million by 2.4%. The top line also improved 5.9% year over year.
For the full-year 2022, total revenues came in at $14.39 billion, beating the Zacks Consensus Estimate of $14.31 billion by 0.6%. Total revenues also increased 4.8% year over year.
Backlog
At the end of the fourth quarter of 2022, the company’s total backlog was $35.78 billion, up from $35.02 billion at the third-quarter 2022 end. Of this, $8.38 billion was funded.
Operational Statistics
The total cost of revenues in the quarter increased by 6.5% to $3,176 million. The operating income totaled $364 million compared with the year-ago quarter’s operating income of $332 million.
The operating income margin for the quarter was 9.8% compared with 9.5% in the prior-year quarter. Interest expenses were $51 million, up 10.9% year over year.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 0.3% year over year to $2,068 million in the fourth quarter. The increase can be attributed to higher Navy NGEN-R SMIT and various force protection programs.
Moreover, the segment’s operating income increased to $364 million from the year-ago quarter’s $332 million, with the operating margin being 9.8%.
Health: The segment recorded revenues of $691 million in the fourth quarter, which increased 10% year over year. The increase in revenues was the result of increased volumes on the Defense Healthcare Management System Modernization program, the ramp-up of the Military and Defense Healthcare Management System Modernization and new work on SSA ITSSC2.
The operating income was $99 million compared with the year-ago quarter’s income of $112 million. The operating margin came in at 14.3%.
Civil: Revenues in this segment amounted to $938 million, up 17%. The upside was driven by the ramp-up of the National Aeronautics and Space Administration and Advanced Enterprise Global Information Technology Solutions contract. While the operating income increased from $80 million to $105 million, the operating margin was 11.2%.
Financials
Leidos Holdings’ cash and cash equivalents as of Dec 30, 2022 were $516 million compared with $727 million as of Dec 31, 2021.
The long-term debt, net of the current portion, amounted to $3,928 million as of Dec 30, 2022 compared with $4,593 million as of Dec 31, 2021.
Net cash provided by operating activities in 2022 was $857 million compared with $927 million a year ago.
2023 Guidance
Leidos Holdings initiated its 2023 view. The company expects to generate adjusted earnings in the range of $6.40-$6.80 per share. The Zacks Consensus Estimate for 2023 earnings, pegged at $6.80 per share, is higher than the midpoint of the guidance range.
LDOS expects revenues in the range of $14.7-$15.1 billion. The Zacks Consensus Estimate for 2023 revenues, pegged at $15.04 billion, is higher than the midpoint of the guided range. The company expects its cash flow from operating activities to be at or more than $700 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Leidos has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 B. 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. It's no surprise Leidos has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
