Author: Waleed M. Tariq
- Leidos delivers health, civil, and defense solutions abroad.
- Mission operations, mission software products, and integrated systems are critical. DoD, USIC, DHS, FAA, and VA contributed 87% of 2021 revenue.
- The company is diversifying aggressively and has lucrative contracts.
- Balance sheet and valuation may be better, but advantages outweigh risks.
- The corporation is investing in its future, which looks positive.
- The balance sheet is flawed.
Health and Civil Segments
- Health is most profitable and fastest-growing. Profitability was enhanced through procurement and delivery efficiencies.
- Lower civil sales and profit. The segment’s operating margin rose from 5.4% in Q1 2021 to 9.7% in the MRQ.
|YoY Revenue Growth||5%||4%||10%||13.65%|
|Net Operating Income||152||74||102||308*|
|Operating Margin Growth||20%||80%||-5%||19%|
|% of Gross Operating Income||46%||23%||31%||100%|
|YoY Backlog Growth||2.4%||35%||6.6%||11.5%|
- The company’s mainstay needs notice. NGEN-R SMIT and IFPC contracts improved sales 5%. The largest category has the lowest operating margin.
- The 2016 acquisitions of LMT’s IS&GS division doubled the company’s size and created a basic business unit.
- The company’s forward dividend yield is 1.4% and its 5-year growth rate is 2.1%, both below the industry median.
Better balance sheet
- Strong cash flow is vital to improving its balance sheet, as its current and quick ratios are both 1.
- The company’s balance sheet isn’t bad, but it may be deleveraged to enhance cash flow and returns.
- With increased momentum, I predict the stock to gain a lot within a year.