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Leidos (NYSE:LDOS) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Leidos Holdings, Inc. (NYSE:LDOS) is scheduled to report Q3 earnings results on November 2, 2020.

The company is expected to report earnings of $1.24/share on revenue of $3.18 billion. The consensus earnings per share (EPS) of $1.24/share is based on a poll of 13 analysts and represents a decline in eps of −9.0% over the same quarter last year, when the company reported earnings of $1.36/share.

The revenue forecast of $3.18 billion based on a poll of 11 analysts implies a year-over-year (YoY) growth in revenue of 12.2%. Last year the company reported $2.835 billion in revenue for the quarter.

Expected to report EPS contraction of −9.0% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $3,180.49 $2,835.00 12.2%
EPS $1.24 $1.36 −9.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Leidos Holdings, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.09 $1.55 42.0% Beat
Q1, 2020 $1.23 $1.19 −3.0% Missed
Q4, 2019 $1.35 $1.51 12.2% Beat
Q3, 2019 $1.19 $1.36 14.0% Beat
Q2, 2019 $1.11 $1.16 4.1% Beat
Q1, 2019 $1.01 $1.13 12.1% Beat
Q4, 2018 $1.07 $1.10 2.9% Beat
Q3, 2018 $1.11 $1.14 2.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 3, 2020, the stock price reacted by falling −8.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $98.30 $89.73 −8.7% Decline
May 5, 2020 $98.91 $97.18 −1.7% Decline
February 18, 2020 $112.81 $120.33 6.7% Increase
October 29, 2019 $80.81 $86.69 7.3% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.69, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.69 implies a 0.4% chance of earnings manipulation.

Fundamentals And Technical Analysis

Leidos Holdings, Inc. is currently trading at $83.44/share, down −2.8% for the day. The company is trading at approximately 66.3% of its 52-week high of $125.84/share. The company’s stock price is down −7.0% since the last earnings report and down −3.1% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 36.72 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:LDOS Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 19.45 and a forward P/E multiple of 15.63.

Leidos Holdings, Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.35. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date July 3, 2020
Stock Price (Current) $83.44
P/E Ratio 19.5x
P/E Ratio (Fwd) 15.6x
PEG Ratio −4.4
Total Debt / Total Capital 31.7%
Levered Free Cash Flow $1.147 billion
EV / EBITDA 13.9x

Finbox

Leidos Holdings, Inc. is a large-cap stock with a market capitalization of $11.865 billion and a total enterprise value of $16.939 billion. The company operates in the Information Technology sector and the IT Services industry.

Leidos Holdings, Inc. provides services and solutions in the defense, intelligence, civil, and health markets in the United States and internationally. It operates through three segments: Defense Solutions, Civil, and Health. The Defense Solutions segment offers national security solutions and systems for air, land, sea, space, and cyberspace for the U.S. Intelligence Community, Department of Defense, military services, the U.S. Department of Homeland Security, and government agencies of U.S. allies abroad, as well as other federal, civilian, and commercial customers in the national security industry. Its solutions include technology, intelligence systems, command and control platforms, data analytics, logistics, and cybersecurity solutions, as well as intelligence analysis and operations support services to critical missions. The Civil segment provides systems integration services to Air Navigation Service providers, including the Federal Aviation Administration, Transportation Security Administration, and airport operators; and vehicle and cargo inspection system, which enables the scanning of vehicles and cargo that produces an image using a low radiation dose. It also offers information technology (IT) solutions in cloud computing, mobility, application modernization, DevOps, data center, network modernization, asset management, help desk operations, and digital workplace enablement; federal environment and infrastructure; and logistics services. The Health segment offers solutions to federal and commercial customers responsible for health and well-being of people worldwide, including complex systems integration, managed health services, enterprise IT transformation, and life sciences services. Leidos Holdings, Inc. was founded in 1969 and is headquartered in Reston, Virginia.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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