Leidos Stock Falls On Missing Q2 EPS Estimates, Reiterates FY21 Guidance

Leidos Holdings Inc LDOS reported second-quarter FY21 revenue growth of 18.3% year-on-year to $3.45 billion, beating the analyst consensus of $3.38 billion. Revenue grew 16% organically.
The most significant revenue contributors were the increase in veterans' disability examinations after the pause from the pandemic and the start-up of the Navy Next Generation IT contract.
Defense Solutions' revenue rose 14.1% Y/Y to $2 billion, and its operating margin remained consistent at 6.8%.
Civil revenue increased 5.4% Y/Y to $799 million, and the segment's operating margin contracted 340 bps to 6.9%.
Health revenue expanded 61.7% Y/Y to $645 million. The operating margin expanded by 1,630 bps to 16.6%.
Net bookings totaled $3.8 billion in Q2, representing a book-to-bill ratio of 1.1. As a result, the backlog was $33.5 billion.
The operating margin contracted 70 bps to 7.8%. The adjusted EBITDA margin contracted 140 bps to 10.4%.
Non-GAAP EPS of $1.52 missed the analyst consensus of $1.58.
Leidos held $338 million in cash and equivalents. The company generated $17 million in operating cash flow during the quarter.
Outlook: Leidos reaffirmed FY21 revenue guidance of $13.7 billion- $14.1 billion versus the analyst consensus of $13.96 billion.
The non-GAAP EPS outlook is unchanged at $6.35 - $6.65 compared to the analyst consensus of $6.61.
Price action: LDOS shares are trading lower by 1.97% at $105.00 in premarket trading on Tuesday.

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