LDOS - Embedded Expectations Analysis - 2021 01 13
Leidos Holdings, Inc. (LDOS:USA) currently trades above recent averages relative to UAFRS-based (Uniform) earnings, with a 17.8x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about organic revenue growth, their Navy NextGen protest, and new initiativesSpecifically, management may lack confidence in their ability to sustain organic revenue, work through their backlog of outstanding disability exams, and improve their liquidity position. In addition, they may have concerns about the negative impact of COVID-19, their ability to sustain intelligence contract awards performance, and the outcome of the Navy NextGen protest. Furthermore, management may be overstating the potential of their innovation center initiative, and they may be concerned about the pace of their new program ramp-ups and changing government spending priorities
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.
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
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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