Leidos Holdings, Inc. (LDOS – Free Report) , with rising earnings estimates, robust return on equity (ROE) and a solid backlog, offers a great investment opportunity in the Zacks Aerospace Defense industry.
Let us focus on the reasons that make this Zacks Rank #1 (Strong Buy) stock an attractive investment pick at the moment.
Growth Projections & Surprise History of LDOS
The Zacks Consensus Estimate for Leidos’ 2024 earnings per share (EPS) has increased 1.4% to $10.03 in the past 30 days and indicates a 37.4% improvement from the year-ago reported figure.
The consensus estimate for total revenues is $16.42 billion, which indicates growth of 6.4% from the 2023 figure.
Leidos’ long-term (three to five years) earnings growth rate is 14.8%.
It delivered an average earnings surprise of 29.92% in the last four quarters.
LDOS’ ROE
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, LDOS’ ROE is 30.31% compared with its industry’s average of 9.59%. This indicates that the company has been utilizing its funds more constructively than its peers in the sector.
Leidos’ Debt Position
Currently, the company’s total debt to capital is 50.03%, better than the industry’s average of 55%.
Leidos’ times interest earned (TIE) ratio at the end of the third quarter was 9.07. A TIE ratio of more than one indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
LDOS’ Liquidity
Leidos’ current ratio at the end of the third quarter was 1.23. A current ratio of greater than one indicates the company’s ability to meet its future short-term liabilities without difficulties.
Rising Backlog of Leidos
Contract wins from the Pentagon and other U.S allies for its cost-effective military technologies are one of Leidos’ key revenue sources. These contract wins help enhance the company’s bookings and backlog.
Leidos had an excellent backlog of $40.56 billion as of Sept. 30, 2024, up from $36.49 billion in the prior year. Such significant backlog trends improve the company’s revenue-generating possibilities for the following quarters.
LDOS Stock’s Price Performance
LDOS shares have gained 34.4% in the past year against the industry’s 6.8% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the same sector are Archer Aviation (ACHR – Free Report) , Triumph Group (TGI – Free Report) and Leonardo DRS, Inc. (DRS – Free Report) . Triumph Group sports a Zacks Rank of 1 at present, and Archer Aviation and Leonardo carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Archer Aviation delivered an average earnings surprise of 6.89% in the last four quarters. The Zacks Consensus Estimate for ACHR’s 2025 sales is pinned at $36.2 million, which indicates massive year-over-year growth from 2024’s estimated sales of $1.1 million.
Triumph Group delivered an average earnings surprise of 100.48% in the last four quarters. The Zacks Consensus Estimate for TGI’s fiscal 2025 sales is pinned at $1.33 billion, which indicates year-over-year growth of 12%.
Leonardo DRS delivered an average earnings surprise of 22.27% in the last four quarters. The Zacks Consensus Estimate for DRS’ 2025 sales is pinned at $3.43 billion, which indicates year-over-year growth of 7.4%.
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