Yahoo Finance Reasons to Add Leidos (LDOS) Stock to Your Portfolio Now
Leidos Holdings, Inc. LDOS, with rising earnings estimates, robust ROE and a solid backlog, offers a great investment opportunity in the aerospace sector.
Let’s focus on the reasons that make this Zacks Rank #2 (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 9% to $8.46 in the past 60 days. The Zacks Consensus Estimate for the company’s total revenues for 2024 stands at $16.07 billion, which indicates growth of 4.1% from the 2023 reported figure.
The company’s long-term (three to five years) earnings growth rate is pegged at 11.1%. It delivered an average earnings surprise of 23.43% 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 25.66% compared to its industry’s average of 11.66%. 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 first quarter of 2024 was 3.7. 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 first quarter of 2024 was 1.35. The ratio being greater than one indicates the company’s ability to meet its future short-term liabilities without difficulties.
Rising Backlog
One of the primary sources of revenue generation for Leidos Holdings is contract wins from the Pentagon and other U.S. allies for its affordable military products. The company's bookings and backlog count are boosted by these contract wins.
At the end of March 2024, Leidos boasted a healthy backlog count of $36.57 billion, which indicates an improvement over the previous year's amount of $35.09 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 surged 33.2% against its industry’s decline of 11%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are HEICO Corporation HEI, BAE Systems BAESY and Safran SAFRY, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HEICO’s long-term earnings growth rate is pegged at 18.9%. The Zacks Consensus Estimate for HEI’s 2024 sales is pegged at $3.86 billion, which indicates an improvement of 30.2% from the 2023 reported sales figure.
BAE Systems’ long-term earnings growth rate is pegged at 12.2%. The Zacks Consensus Estimate for BAESY’s 2024 sales is pegged at $35.26 billion, which implies an improvement of 34.1% from the 2023 reported sales figure.
Safran’s long-term earnings growth rate is pegged at 34.7%. The Zacks Consensus Estimate for SAFRY’s 2024 sales is pegged at $29.93 billion, which calls for a rise of 45.5% from the 2023 reported sales figure.
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