Leidos Holdings, Inc. LDOS recently secured a $26.8-million modification contract for procuring Saturn Arch Quick Reaction Capability Aircraft. The contract was awarded by the U.S. Army Contracting Command, Aberdeen Proving Ground, Maryland.
Work related to the deal will be performed in Bridgewater, VA and is expected to get completed by Sep 16, 2019. Leidos Holdings will utilize fiscal 2018 other procurement and Army funds for completing the task.
A Brief Note on Saturn Arch
Saturn Arch is an aerial surveillance geospatial intelligence program used for conducting theater-wide improvised explosive device neutralizing missions, since 2010. It uses a variety of platforms and sensor assets for detecting and assisting in the removal of enemy IEDs and other threats.
The program has been expanded since its inception to include more conventional ISR missions and is also equipped to identify and assist removal of IEDs from the battlefield in Afghanistan. The program now boasts a much wider network of aircraft and platforms to expand valuable ISR support, even further across the combat zone.
What’s Favoring Leidos Holdings?
Increased contract wins for its cost-effective defense solutions from the Pentagon as well as other U.S. allies have been serving as a primary growth driver for Leidos Holdings. In fact, these contract wins tend to bolster the company’s backlog. Evidently, at the end of Jun 29, 2018, Leidos Holdings’ total backlog stood at $18.33 billion compared with $17.61 billion at first-quarter end.
Further, from the perspective of its Defense solutions, the company's backlog during the second quarter stood at $8.32 billion compared with the $8.09-billion backlog reported at the end of the first quarter, thus reflecting a 2.8% increase. Such solid backlog trends indicate impressive revenue growth prospects for the company in quarters ahead. Considering this, we expect the latest contract win to bolster Leidos Holdings’ top line in days ahead.
Also, the fiscal 2019 defense budget that was approved by the U.S. Senate toward the end of June 2018 reflect solid growth opportunities for defense contractors like Leidos Holdings, going forward.
Price Movement
Leidos Holdings’ stock improved about only 24.4% in the last year compared with the industry’s growth of 22.2%. The outperformance may have been a result of the favorable budgetary revisions along with solid cash flow growth and strategic restructuring initiatives undertaken by the company.
Zacks Rank & Stocks to Consider
Leidos Holdings currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same sector are Aerojet Rocketdyne Holdings AJRD, Engility Holdings EGL and Huntington Ingalls Industries HII.
While Aerojet Rocketdyne Holdings sports a Zacks Rank #1 (Strong Buy), Engility Holdings and Huntington Ingalls carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Aerojet Rocketdyne came up with an average positive earnings surprise of 9.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 30.9% to $1.27 in the last 90 days.
Engility Holdings delivered an average positive earnings surprise of 19% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 16.8% to $2.02 in the last 90 days.
Huntington Ingalls Industries came up with an average positive earnings surprise of 9.48% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 3.7% to $17.24 in the last 90 days.
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