Leidos Holdings, Inc.’s LDOS third-quarter 2024 adjusted earnings of $2.93 per share beat the Zacks Consensus Estimate of $1.96 by 49.5%. The bottom line also increased 44.3% from $2.03 registered in the prior-year quarter. 

The year-over-year upside was driven by increased volumes on managed health services programs and improved program execution and cost control across the company.

LDOS reported GAAP earnings of $2.68 per share, implying a significant improvement from the prior-year loss of $2.91 per share.

Total Revenues

Total revenues of $4.19 billion beat the Zacks Consensus Estimate of $4.05 million by 3.6%.

The top line also improved 6.9% year over year, driven by increased demand across all customer segments, especially for managed health services.

Leidos Holdings, Inc. Price, Consensus and EPS Surprise

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

Backlog

The company recorded a total backlog of $40.56 billion, up from $36.49 billion in the second quarter of 2024. Of this amount, $9.09 billion was funded.

Operational Statistics

The cost of revenues increased 2.8% year over year to $3,428 million.

The company reported an operating income of $516 million against an operating loss of $336 million in the year-ago quarter.

The adjusted operating margin was 13.4% compared with 10.7% in the prior-year period.

Interest expenses totaled $46 million, down 13.2% year over year.

Segmental Performance

National Security and Digital: Net revenues in this segment improved 0.7% year over year to $1.87 billion. The increase can be attributed to increased volumes from several enterprise Information Technology programs. 

This segment’s adjusted operating income increased to $195 million from the year-ago level of $182 million. The segment’s adjusted operating margin was 10.5%, up 70 basis points (bps) from the prior-year figure of 9.8%.

Health & Civil: The segment recorded revenues of $1.23 billion, up 16.1% year over year. This improvement can be attributed to increased volumes and case complexity within the managed health services business as well as net write-ups on certain programs.

This unit’s adjusted operating income totaled $297 million compared with $174 million in the year-ago quarter. The segment’s adjusted operating margin was 24.2%, up 770 bps year over year.

Commercial & International: Revenues in this segment amounted to $578 million, up 4.7% year over year. The upside was driven by increased deliveries of security products and commercial energy engineering services.

This segment recorded an adjusted operating income of $51 million, which came in line with the year-ago recorded figure. The adjusted operating margin was 8.8%, down 40 bps year over year.

Defense Systems: Revenues in this segment amounted to $522 million, up 13% year over year. The upside was driven by increased scope and improved program execution on fixed price development programs.

This segment recorded an adjusted operating income of $53 million compared with $34 million in the year-ago period. The adjusted operating margin was 10.2%, up 280 bps year over year.

Financials

Cash and cash equivalents as of Sept. 27, 2024, totaled $1,185 million compared with $777 million as of Dec. 29, 2023.

The long-term debt, net of the current portion, amounted to $4.08 billion as of Sept. 27, 2024, compared with $4.66 billion as of Dec. 29, 2023.

Net cash flow from operating activities totaled $1.09 billion at the end of the third quarter of 2024 compared with $0.86 billion recorded a year ago.

2024 Guidance

Leidos Holdings has raised its 2024 guidance. The company now expects to generate adjusted earnings in the range of $9.80-$10.00 per share, up from the prior guidance of $8.60-$9.00. The Zacks Consensus Estimate for earnings is pegged at $8.96 per share, lower than the company’s new guided range.

LDOS currently expects 2024 revenues to be in the band of $16.35-$16.45 billion, higher than the earlier guidance of $16.10-$16.40 billion. The Zacks Consensus Estimate for revenues is pegged at $16.27 billion, lower than the company’s new guided range.

The company currently expects cash flow from operating activities of $1.35 billion in 2024 compared to the earlier guidance of $1.30 billion.

Zacks Rank

Leidos Holdings currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Defense Releases

Hexcel Corporation HXL reported third-quarter 2024 adjusted earnings of 47 cents per share, which improved 23.7% from the year-ago figure of 38 cents. The bottom line also surpassed the Zacks Consensus Estimate by 2.2%.

In the third quarter, the company’s net sales totaled $456.5 million, which beat the Zacks Consensus Estimate of $456.2 million by 0.1%. The top line also witnessed an improvement of 8.8% from the year-ago reported sales of $419.5 million.

Lockheed Martin Corporation LMT reported third-quarter 2024 adjusted earnings of $6.84 per share, which beat the Zacks Consensus Estimate of $6.47 by 5.7%. The bottom line also rose 1% from the year-ago recorded figure of $6.77.

Net sales were $17.10 billion, which missed the Zacks Consensus Estimate of $17.28 billion by 1%. The top line, however, increased 1.3% from $16.88 billion reported in the year-ago quarter.

RTX Corporation’s RTX third-quarter 2024 adjusted earnings per share of $1.45 beat the Zacks Consensus Estimate of $1.33 by 9%. The bottom line also improved 16% from the year-ago level of $1.25.

RTX’s third-quarter sales totaled $20.09 billion, which surpassed the Zacks Consensus Estimate of $19.91 billion by 0.9%. The top line also surged a solid 49.2% from $13.46 billion recorded in the third quarter of 2023.

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