In This Article:
For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Leidos Holdings Inc’s (NYSE:LDOS) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
See our latest analysis for Leidos Holdings
How LDOS fared against its long-term earnings performance and its industry
LDOS’s trailing twelve-month earnings (from 29 June 2018) of US$442m has jumped 38% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 33%, indicating the rate at which LDOS is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is solely due to industry tailwinds, or if Leidos Holdings has experienced some company-specific growth.
In terms of returns from investment, Leidos Holdings has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 6.6% is below the US IT industry of 6.7%, indicating Leidos Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Leidos Holdings’s debt level, has declined over the past 3 years from 13% to 8.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 57% to 90% over the past 5 years.
What does this mean?
Though Leidos Holdings’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Leidos Holdings to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for LDOS’s future growth? Take a look at our free research report of analyst consensus for LDOS’s outlook.
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Financial Health: Are LDOS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 29 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.