Genuine Parts (GPC) was founded by Carlyle Fraser in 1928 with six employees and $75,000 in first ye...
Leidos: Engineering, Defense and Airport Security
02/11/2020 5:00 am EST
Leidos Holdings (LDOS) ended 2019 on a positive note, generating all-time highs in revenue and bookings, while its backlog rose to a record $23.9 billion, notes Richard Moroney, editor of Dow Theory Forecasts.
Leidos, a provider of technology and engineering services that generates 85% of its revenue from the federal government, wasn’t just a one-quarter wonder. Over the last 12 months, Leidos increased sales 7%, per-share profits 14%, and operating cash flow 12%.
These gains reflect a series of new government contracts as well as renewals, including a Transportation Security Administration contract to oversee screening at about 450 airports, a deal potentially worth $926 million over the next five years. Leidos has a history of augmenting its growth with acquisitions.
Earlier this month, the company agreed to pay $1 billion to acquire a security detection and automation businesses from L3Harris Technologies (LHX) and completed its $1.65 billion acquisition of Dynetics, an all-cash deal first announced in December. Leidos plans to release December quarter results on Feb. 18.
The consensus projects revenue growth of 8% and per-share-profit growth of 22% to $1.35. Analysts target sales growth of 8% and profit growth of 14% in 2020, followed by gains of 6% and 9%, respectively, in 2021.
The company has a history of exceeding expectations, posting better-than-expected profits in each of the last eight quarters. Despite posting total returns of 35% over the last six months and 74% over the last year, Leidos remains reasonably valued at 20 times expected 2020 earnings.
The stock also sports discounts to the industry based on price/sales, price/free-cash-flow, and enterprise-value/EBITDA ratios.
Leidos certainly seems happy with the price of its own shares, buying back $200 million worth in the September quarter alone as part of an accelerated repurchase program. Leidos seems capable of outperforming over the next 12 months.
Related Articles on INDUSTRIALS
We are raising our rating on Packaging Corp. of America (PKG) to "buy" from "hold" and setting a tar...
The key to surviving this difficult time is to have companies with strong balance sheets, consistent...
With so many serious threats overshadowing the economy you should only buy the very best stocks with...