Spotting Winners: Leidos (NYSE:LDOS) And Defense Contractors Stocks In Q4
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how defense contractors stocks fared in Q4, starting with Leidos (NYSE:LDOS). Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds. The 14 defense contractors stocks we track reported a satisfactory Q4. As a group, revenues beat analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was 0.8% below. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.7% since the latest earnings results. Leidos (NYSE:LDOS) Formed through the split of IT services company SAIC, Leidos (NYSE:LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets. Leidos reported revenues of $4.21 billion, down 3.6% year on year. This print fell short of analysts’ expectations by 2.5%. Overall, it was a mixed quarter for the company with a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ revenue estimates. “Our performance this quarter and throughout the year underscores the incredible resilience of our team and the power of our strategy in action,” said Leidos Chief Executive Officer Tom Bell. Leidos Total Revenue Unsurprisingly, the stock is down 8.9% since reporting and currently trades at $160.53. Is now the time to buy Leidos? Access our full analysis of the earnings results here, it’s free. Best Q4: Leonardo DRS (NASDAQ:DRS) Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ:DRS) is a provider of defense systems, electronics, and military support services. Leonardo DRS reported revenues of $1.06 billion, up 8.1% year on year, outperforming analysts’ expectations by 7%. The business had an exceptional quarter with a solid beat of analysts’ revenue and EBITDA estimates. Leonardo DRS Total Revenue The market seems happy with the results as the stock is up 16.5% since reporting. It currently trades at $44.42.