Leidos (NYSE:LDOS) Shares Gap Down – Time to Sell?

Leidos Holdings, Inc. (NYSE:LDOS) gapped down prior to trading on Tuesday. The stock had previously closed at $144.16, but opened at $133.77. Leidos shares last traded at $136.3740, with a volume of 297,595 shares changing hands.

Key Headlines Impacting Leidos

Here are the key news stories impacting Leidos this week:

• Positive Sentiment: Strong earnings and cash generation: Leidos reported third-quarter adjusted EPS of $3.62, well above the $3.04 consensus and up from $3.05 a year earlier. Revenue increased 4% year over year to approximately $4.6 billion, while adjusted EBITDA reached $644 million, operating cash flow was $523 million and free cash flow was $476 million. Leidos Delivers Strong Third Quarter and Enhances Full-Year Guidance
• Positive Sentiment: Full-year outlook enhanced: Management increased its full-year guidance, signaling confidence in continued operating momentum and supporting the investment case despite the mixed revenue result. Leidos Delivers Strong Third Quarter and Enhances Full-Year Guidance
• Positive Sentiment: Defense growth opportunity: Leidos is mobilizing suppliers to support production of thousands of low-cost containerized and AGM-190A Havoc Spear cruise missiles. The initiative could strengthen its long-term defense pipeline, although near-term financial impact was not specified. Leidos mobilizes supply chain to scale production of thousands of U.S. cruise missiles
• Positive Sentiment: Dividend increased: Leidos raised its quarterly dividend 4.7% to $0.45 per share, providing an annualized payout of $1.80. Leidos dividend announcement
• Negative Sentiment: Revenue missed expectations: Quarterly revenue of $4.63 billion was below analysts’ $4.71 billion estimate. This top-line miss may be driving the negative stock reaction, despite the sizable EPS beat. Leidos Q3 Earnings: Key Metrics Versus Estimates

Analyst Upgrades and Downgrades

LDOS has been the topic of a number of research reports. The Goldman Sachs Group dropped their price target on Leidos from $152.00 to $132.00 and set a “neutral” rating on the stock in a research note on Wednesday, August 12th. TD Cowen reduced their price objective on Leidos from $135.00 to $130.00 and set a “hold” rating for the company in a research note on Tuesday, October 6th. Bank of America increased their price objective on Leidos from $125.00 to $135.00 and gave the company a “neutral” rating in a report on Friday, September 18th. UBS Group boosted their target price on Leidos from $124.00 to $138.00 and gave the company a “neutral” rating in a report on Wednesday, August 5th. Finally, Wall Street Zen raised Leidos from a “hold” rating to a “buy” rating in a report on Thursday, July 16th. One research analyst has rated the stock with a Strong Buy rating, four have issued a Buy rating and ten have issued a Hold rating to the stock. According to data from MarketBeat, the stock has an average rating of “Hold” and a consensus price target of $150.85.

Leidos Stock Performance

The stock’s 50 day moving average price is $129.38 and its 200 day moving average price is $141.34. The company has a current ratio of 1.63, a quick ratio of 1.60 and a debt-to-equity ratio of 1.13. The firm has a market cap of $17.51 billion, a PE ratio of 13.03, a P/E/G ratio of 1.55 and a beta of 0.55.

Leidos (NYSE:LDOS) last announced its quarterly earnings results on Monday, November 2nd. The aerospace company reported $3.62 earnings per share for the quarter, topping analysts’ consensus estimates of $3.04 by $0.58. Leidos had a net margin of 7.80% and a return on equity of 30.81%. The firm had revenue of $4.63 billion during the quarter, compared to analysts’ expectations of $4.71 billion. During the same period in the prior year, the company earned $3.05 EPS. The firm’s revenue was up 3.6% on a year-over-year basis. As a group, equities analysts forecast that Leidos Holdings, Inc. will post 12.38 earnings per share for the current fiscal year.

Leidos Increases Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Thursday, December 31st. Shareholders of record on Tuesday, December 15th will be paid a dividend of $0.45 per share. This is a boost from Leidos’s previous quarterly dividend of $0.43. This represents a $1.80 dividend on an annualized basis and a dividend yield of 1.3%. The ex-dividend date is Tuesday, December 15th. Leidos’s payout ratio is presently 16.04%.

Leidos declared that its Board of Directors has approved a share buyback program on Friday, July 31st that authorizes the company to buy back 20,000,000 outstanding shares. This buyback authorization authorizes the aerospace company to reacquire shares of its stock through open market purchases. Stock buyback programs are usually an indication that the company’s leadership believes its shares are undervalued.

Insider Activity

In other news, Director Gary May sold 1,000 shares of the stock in a transaction dated Tuesday, September 1st. The stock was sold at an average price of $140.85, for a total value of $140,850.00. Following the completion of the sale, the director owned 10,204 shares in the company, valued at approximately $1,437,233.40. This trade represents a 8.93% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this link. Also, Director Noel Geer sold 10,000 shares of the firm’s stock in a transaction dated Tuesday, August 11th. The shares were sold at an average price of $140.66, for a total value of $1,406,600.00. Following the sale, the director owned 34,274 shares in the company, valued at approximately $4,820,980.84. The trade was a 22.59% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. 0.77% of the stock is owned by corporate insiders.

Institutional Trading of Leidos

Hedge funds have recently made changes to their positions in the company. BlackRock Inc. purchased a new stake in Leidos during the 2nd quarter worth $1,024,436,000. State Street Corp lifted its holdings in Leidos by 2.6% in the 2nd quarter. State Street Corp now owns 6,277,845 shares of the aerospace company’s stock worth $646,430,000 after buying an additional 161,407 shares in the last quarter. Dimensional Fund Advisors LP boosted its position in Leidos by 2.6% in the 1st quarter. Dimensional Fund Advisors LP now owns 1,859,616 shares of the aerospace company’s stock valued at $289,193,000 after buying an additional 47,542 shares during the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC boosted its position in Leidos by 16.8% in the 2nd quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 1,004,347 shares of the aerospace company’s stock valued at $103,418,000 after buying an additional 144,716 shares during the last quarter. Finally, Pacer Advisors Inc. boosted its holdings in Leidos by 30.5% in the first quarter. Pacer Advisors Inc. now owns 567,601 shares of the aerospace company’s stock valued at $88,273,000 after purchasing an additional 132,683 shares during the last quarter. Hedge funds and other institutional investors own 76.12% of the company’s stock.

About Leidos

Leidos Holdings, Inc (NYSE: LDOS) is a technology, engineering and science company that provides services and solutions to government and commercial customers. Its work supports defense, intelligence, civil government, health and transportation missions, with offerings that include information technology modernization, systems integration, cybersecurity, data analytics, artificial intelligence, engineering and mission operations.

The company also provides health technology and scientific services, transportation management systems, aviation and security solutions, and support for complex government programs.