Leidos Holdings (LDOS) to Post Q3 Earnings: What's in Store?

Leidos Holdings LDOS is scheduled to release third-quarter 2019 results on Oct 29, after market closes. In the last reported quarter, the company delivered a positive earnings surprise of 5.45%.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Factors to Consider

Leidos Holdings generates almost half of its revenues from the Defense Solutions segment. The current U.S. administration is in favor of spending abundantly on the nation’s defense. Hence, the segment has been witnessing accelerated growth in recent times. This trend is expected to have made a positive impact on the company’s performance in the third quarter.

Meanwhile, Leidos Holdings completed the acquisition of IMX Medical Management Services and its affiliated businesses in the soon-to-be-reported quarter. Addition of IMX Medical is expected to have boosted medical services provided by QTC Management — the company’s wholly-owned subsidiary.

Thus, positive synergies from IMX Medical’s acquisition are expected to have benefitted the Health segment’s performance in the third quarter.

Notably, the Zacks Consensus Estimate for third-quarter revenues is pegged at $2.74 billion, which indicates a rise of 6.4% from the year-ago quarter’s reported figure.

Such solid revenue growth along with expected segmental operating income growth might have boosted the bottom line. The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $1.20, which indicates rise of 5.3% from the year-ago quarter’s reported figure.

During the quarter, Leidos Holdings signed a deal worth $159 million with KULR Technology Group to supply National Aeronautics and Space Administration with Thermal Runaway Shield storage solution. Moreover, the company won a $445.4-million contract to provide a full range of classified and unclassified information technology services to the Air Force in the National Capital Region. Such contract wins are likely to get reflected in the company’s upcoming quarterly results in the form of improved backlog count.

Earning Whisper

Our proven model predicts an earnings beat for Leidos Holdings this earnings season. 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.

Earnings ESP: The company’s Earnings ESP is +1.52%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Leidos Holdings carries a Zacks Rank #3.

Leidos Holdings, Inc. Price and EPS Surprise


Leidos Holdings, Inc. Price and EPS Surprise

Leidos Holdings, Inc. price-eps-surprise | Leidos Holdings, Inc. Quote


Other Stocks to Consider

Investors may also consider other companies from the same industry that also have the right combination of elements to post an earnings beat:

Huntington Ingalls Industries HII is set to release third-quarter results on Nov 7. It has an Earnings ESP of +2.09% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Defense Release

The Boeing Company BA reported third-quarter 2019 earnings of $1.45 per share, which missed the Zacks Consensus Estimate of $2.04 by 28.9%. The bottom line declined 59% from the year-ago quarter’s figure of $3.58.

Lockheed Martin Corp LMT reported third-quarter 2019 earnings of $5.66 per share, which surpassed the Zacks Consensus Estimate of $5.03 by 12.5%. The bottom line also improved 10.1% from $5.14 in the year-ago quarter.

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