Report
Valens Research

LDOS - Embedded Expectations Analysis - 2019 06 24

Leidos Holdings, Inc. (LDOS:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 16.0x Uniform P/E, implying bearish expectations for the firm. Moreover, management appears to have concerns about their operating margins, headcount increases, and their ability to fund pipeline expansion.

Specifically, management may lack confidence in their ability to sustain backlog and bookings growth, continue their share repurchase plan, and improve their DHMSM program, Health business, and operating margins. Moreover, they may be concerned about their headcount increases, advance payment and EAC write-up levels, and the progress of their NASA NEST contract decision. Finally, they may be concerned about their ability to generate funds to expand their pipeline, the impact of new lease accounting standards, and their services mix.
Underlying
Leidos Holdings Inc.

Leidos Holdings is a holding company. Through its subsidiaries, the company is engaged in a science, engineering and information technology that provides services and solutions in the defense, intelligence, civil and health markets. The company's defense solutions segment deploys solutions in the areas of intelligence surveillance and reconnaissance, enterprise information technology, integrated systems, cybersecurity and global services. The company's civil segment integrates and protects physical, digital and data domains. The company's health segment delivers solutions to federal and commercial customers that are responsible for the health and well-being of people including service members and veterans.

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Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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