Investors might want to bet on Leidos (LDOS), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this security and engineering company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Leidos, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The company is expected to earn $1.34 per share for the current quarter, which represents a year-over-year change of +21.82%.
Over the last 30 days, four estimates have moved higher for Leidos compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 8.71%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $4.96 per share, representing a year-over-year change of +13.24%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, five estimates have moved up for Leidos versus no negative revisions. This has pushed the consensus estimate 5.6% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Leidos currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Investors have been betting on Leidos because of its solid estimate revisions, as evident from the stock's 6.3% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
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Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
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