Leidos Holdings, Inc. LDOS, with rising earnings estimates, robust ROE and a solid backlog, offers a great investment opportunity in the Zacks Aerospace sector.
Let’s focus on the reasons that make this Zacks Rank #1 (Strong Buy) stock an attractive investment pick at the moment.
Solid Growth Projections & Surprise History
The Zacks Consensus Estimate for LDOS’ 2024 earnings per share (EPS) has increased 4.3% to $8.97 in the past 60 days. The Zacks Consensus Estimate for the company’s total revenues for 2024 stands at $16.27 billion, which indicates growth of 5.4% from the 2023 reported figure.
The company’s long-term (three to five years) earnings growth rate is 12.5%. It delivered an average earnings surprise of 23.49% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, LDOS’ ROE is 28.4% compared to its industry’s average of 11.53%. This indicates that the company has been utilizing its funds more constructively than its peers in the sector.
Solvency & Liquidity
Leidos’ times interest earned ratio (TIE) at the end of the second quarter of 2024 was 4.5. The TIE ratio of more than 1 indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
LDOS’ current ratio at the end of the second quarter of 2024 was 1.21. The strong ratio of greater than 1 indicates the company’s ability to meet its future short-term liabilities without difficulties.
Rising Backlog
Contract wins from the Pentagon and other U.S allies for its cost-effective military technologies are one of Leidos Holdings' key sources of revenues. These contract wins help enhance the company's bookings and backlog.
At the end of June 2024, Leidos boasted a healthy backlog count of $36.49 billion, which indicates an improvement over the previous year's figure of $34.15 billion. Such strong backlog patterns boost the company's revenue generation prospects in the upcoming quarters.
Price Performance
In the past six months, LDOS shares have rallied 21.1% compared with the industry’s rise of 2.7%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are Curtiss-Wright Corp. CW, BAE Systems BAESY and RTX Corporation RTX, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Curtiss-Wright delivered an average earnings surprise of 11.52% in the last four quarters. The Zacks Consensus Estimate for CW’s total revenues for 2024 stands at $3.04 billion, which indicates growth of 6.9% from the 2023 reported figure.
BAE Systems’ long-term earnings growth rate is pegged at 12.4%. The Zacks Consensus Estimate for BAESY’s 2024 sales is pegged at $35.84 billion, which implies an improvement of 36.3% from the 2023 reported sales figure.
RTX Corporation’s long-term earnings growth rate is pegged at 10.4%. The Zacks Consensus Estimate for RTX’s 2024 sales is pegged at $79.37 billion, which calls for a rise of 6.7% from the 2023 reported sales figure.
Research Chief Names "Single Best Pick to Double"
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpBae Systems PLC (BAESY) : Free Stock Analysis Report
Curtiss-Wright Corporation (CW) : Free Stock Analysis Report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
RTX Corporation (RTX) : Free Stock Analysis Report
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