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Leidos (LDOS) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Leidos (LDOS) closed at $111 in the latest trading session, marking a -1.02% move from the prior day. This change lagged the S&P 500's 0.65% gain on the day. Elsewhere, the Dow gained 0.94%, while the tech-heavy Nasdaq added 0.9%.

Prior to today's trading, shares of the security and engineering company had gained 11.26% over the past month. This has outpaced the Aerospace sector's gain of 4.46% and the S&P 500's gain of 2.97% in that time.

LDOS will be looking to display strength as it nears its next earnings release, which is expected to be February 18, 2020. In that report, analysts expect LDOS to post earnings of $1.35 per share. This would mark year-over-year growth of 22.73%. Meanwhile, our latest consensus estimate is calling for revenue of $2.83 billion, up 6.93% from the prior-year quarter.

Investors might also notice recent changes to analyst estimates for LDOS. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. LDOS currently has a Zacks Rank of #2 (Buy).

Digging into valuation, LDOS currently has a Forward P/E ratio of 20.58. This represents a premium compared to its industry's average Forward P/E of 18.96.

Also, we should mention that LDOS has a PEG ratio of 2.74. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Aerospace - Defense stocks are, on average, holding a PEG ratio of 2.26 based on yesterday's closing prices.

The Aerospace - Defense industry is part of the Aerospace sector. This group has a Zacks Industry Rank of 191, putting it in the bottom 26% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow LDOS in the coming trading sessions, be sure to utilize Zacks.com.

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