Will Segmental Performance Aid Leidos' (LDOS) Q3 Earnings?
Leidos Holdings, Inc. LDOS is slated to report third-quarter 2022 results on Nov 1 before market open.
Leidos Holdings has a four-quarter earnings surprise of 4.66%, on average. Strong sales growth across most of its segments may have added impetus to its top line in the third quarter.
Defense Solutions
Favorable program wins, strong volumes on certain programs and positive synergies from acquisitions might have added impetus to the revenues of the segment in the third quarter.
However, the completion of a few contracts and the impact of a shift of certain contracts from Defense Solutions to the Civil segment are expected to have partially dampened revenues in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Defense Solutions’ third-quarter revenues, pegged at $2,062 million, suggests an improvement of 2.6% from the year-ago quarter’s reported figure.
Civil
A net increase in the program volume is expected to have positively impacted the revenues of the segment in the soon-to-be-reported quarter. Also, the shift of contracts from Defense Solutions to the Civil segment might have benefited the revenues of the segment in the third quarter.
The Zacks Consensus Estimate for Civil’s third-quarter revenues, pegged at $819.9 million, suggests an improvement of 3.5% from the year-ago quarter’s reported figure.
Health
Higher program volumes, along with recoveries related to stopping work orders on certain programs, may have favorably impacted the segment’s revenues in the third quarter. However, the completion of certain contracts may have dampened the revenues of the segment in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Health’s third-quarter revenues, pegged at $645 million, suggests a decrease of 5.4% from the year-ago quarter’s reported figure.
Third-Quarter Estimates
With improved revenues projected from the majority of Leidos Holdings’ segments, one might remain optimistic about the overall top line of the company.
The Zacks Consensus Estimate for third-quarter sales is pegged at $3.54 billion, indicating an increase of 1.8% from the prior-year reported figure.
A strong top line is likely to have aided LDOS’ bottom line. However, increased legal costs, unexpected arbitration, increased interest expenses and a negative impact of foreign exchange might have dented the overall margin performance, thus adversely impacting the bottom line of the company.
The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.56 per share, indicating a decline of 13.3% from the prior-year reported figure.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Leidos Holdings this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.
Leidos Holdings has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are two defense players you may want to consider as these have the right combination of elements to post an earnings beat this season:
Spirit Aerosystems SPR has an Earnings ESP of +51.95% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Spirit boasts a long-term earnings growth rate of 8.5%. The Zacks Consensus Estimate for SPR’s third-quarter sales is pegged at $1.30 billion.
Huntington Ingalls Industries HII has an Earnings ESP of +0.35% and a Zacks Rank #2. HII delivered a four-quarter average earnings surprise of 12.38%.
The Zacks Consensus Estimate for Huntington’s third-quarter earnings is pegged at $3.53 per share, indicating a decline of 3.3% from the prior-year reported figure. The Zacks Consensus Estimate for Huntington’s third-quarter sales suggests growth of 14.9% from the prior-year reported figure.
Upcoming Defense Release
Embraer S.A. ERJ boasts a long-term earnings growth rate of 17%. The Zacks Consensus Estimate for ERJ’s third-quarter earnings suggests an improvement of 183.3% from the prior-year reported figure.
The Zacks Consensus Estimate for Embraer’s third-quarter sales indicates an increase of 24.8% from the prior-year reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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EmbraerEmpresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report
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Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
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