Intrinsic value of Leidos Holdings - LDOS

Previous Close

$71.72

  Intrinsic Value

$169.87

stock screener

  Rating & Target

str. buy

+137%

Previous close

$71.72

 
Intrinsic value

$169.87

 
Up/down potential

+137%

 
Rating

str. buy

We calculate the intrinsic value of LDOS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  44.40
  40.46
  36.91
  33.72
  30.85
  28.27
  25.94
  23.84
  21.96
  20.26
  18.74
  17.36
  16.13
  15.01
  14.01
  13.11
  12.30
  11.57
  10.91
  10.32
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.55
  7.29
  7.06
  6.86
Revenue, $m
  14,685
  20,627
  28,242
  37,765
  49,416
  63,384
  79,825
  98,859
  120,569
  145,001
  172,171
  202,067
  234,656
  269,890
  307,710
  348,058
  390,872
  436,099
  483,694
  533,622
  585,865
  640,415
  697,284
  756,497
  818,097
  882,142
  948,706
  1,017,877
  1,089,759
  1,164,471
Variable operating expenses, $m
  13,575
  18,831
  25,568
  33,993
  44,300
  56,657
  71,202
  88,041
  107,247
  128,862
  152,315
  178,764
  207,594
  238,764
  272,224
  307,918
  345,794
  385,806
  427,911
  472,082
  518,299
  566,559
  616,869
  669,254
  723,750
  780,409
  839,296
  900,490
  964,082
  1,030,177
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  13,575
  18,831
  25,568
  33,993
  44,300
  56,657
  71,202
  88,041
  107,247
  128,862
  152,315
  178,764
  207,594
  238,764
  272,224
  307,918
  345,794
  385,806
  427,911
  472,082
  518,299
  566,559
  616,869
  669,254
  723,750
  780,409
  839,296
  900,490
  964,082
  1,030,177
Operating income, $m
  1,111
  1,796
  2,674
  3,772
  5,116
  6,727
  8,623
  10,818
  13,322
  16,139
  19,856
  23,303
  27,062
  31,125
  35,487
  40,140
  45,077
  50,293
  55,782
  61,540
  67,565
  73,856
  80,415
  87,243
  94,347
  101,733
  109,410
  117,387
  125,677
  134,293
EBITDA, $m
  2,598
  3,649
  4,997
  6,682
  8,743
  11,214
  14,123
  17,491
  21,332
  25,654
  30,461
  35,751
  41,517
  47,750
  54,442
  61,580
  69,155
  77,157
  85,578
  94,411
  103,654
  113,306
  123,367
  133,844
  144,742
  156,073
  167,850
  180,088
  192,806
  206,025
Interest expense (income), $m
  0
  168
  303
  480
  707
  991
  1,339
  1,756
  2,247
  2,815
  3,462
  4,191
  5,002
  5,894
  6,867
  7,918
  9,047
  10,251
  11,528
  12,878
  14,298
  15,788
  17,347
  18,975
  20,672
  22,439
  24,277
  26,188
  28,175
  30,239
  32,384
Earnings before tax, $m
  943
  1,493
  2,194
  3,065
  4,124
  5,388
  6,867
  8,571
  10,507
  12,677
  15,664
  18,301
  21,167
  24,258
  27,569
  31,093
  34,827
  38,765
  42,904
  47,242
  51,777
  56,509
  61,440
  66,571
  71,908
  77,456
  83,222
  89,212
  95,438
  101,909
Tax expense, $m
  255
  403
  592
  828
  1,114
  1,455
  1,854
  2,314
  2,837
  3,423
  4,229
  4,941
  5,715
  6,550
  7,444
  8,395
  9,403
  10,467
  11,584
  12,755
  13,980
  15,257
  16,589
  17,974
  19,415
  20,913
  22,470
  24,087
  25,768
  27,516
Net income, $m
  688
  1,090
  1,602
  2,237
  3,011
  3,933
  5,013
  6,257
  7,670
  9,254
  11,435
  13,360
  15,452
  17,709
  20,125
  22,698
  25,423
  28,298
  31,320
  34,487
  37,797
  41,252
  44,851
  48,597
  52,493
  56,543
  60,752
  65,125
  69,670
  74,394

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  12,985
  18,238
  24,970
  33,391
  43,692
  56,042
  70,579
  87,408
  106,603
  128,206
  152,229
  178,662
  207,477
  238,629
  272,069
  307,743
  345,599
  385,587
  427,669
  471,815
  518,006
  566,238
  616,520
  668,875
  723,340
  779,966
  838,820
  899,979
  963,536
  1,029,594
Adjusted assets (=assets-cash), $m
  12,985
  18,238
  24,970
  33,391
  43,692
  56,042
  70,579
  87,408
  106,603
  128,206
  152,229
  178,662
  207,477
  238,629
  272,069
  307,743
  345,599
  385,587
  427,669
  471,815
  518,006
  566,238
  616,520
  668,875
  723,340
  779,966
  838,820
  899,979
  963,536
  1,029,594
Revenue / Adjusted assets
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
  1.131
Average production assets, $m
  9,046
  12,706
  17,397
  23,263
  30,440
  39,044
  49,172
  60,897
  74,270
  89,321
  106,057
  124,473
  144,548
  166,252
  189,550
  214,404
  240,777
  268,637
  297,955
  328,711
  360,893
  394,496
  429,527
  466,002
  503,948
  543,400
  584,403
  627,012
  671,292
  717,314
Working capital, $m
  -1,718
  -2,413
  -3,304
  -4,419
  -5,782
  -7,416
  -9,339
  -11,566
  -14,107
  -16,965
  -20,144
  -23,642
  -27,455
  -31,577
  -36,002
  -40,723
  -45,732
  -51,024
  -56,592
  -62,434
  -68,546
  -74,929
  -81,582
  -88,510
  -95,717
  -103,211
  -110,999
  -119,092
  -127,502
  -136,243
Total debt, $m
  5,606
  8,890
  13,098
  18,360
  24,799
  32,517
  41,603
  52,121
  64,118
  77,620
  92,634
  109,155
  127,164
  146,634
  167,534
  189,831
  213,490
  238,483
  264,784
  292,375
  321,245
  351,390
  382,816
  415,538
  449,578
  484,970
  521,754
  559,978
  599,701
  640,987
Total liabilities, $m
  8,115
  11,399
  15,607
  20,869
  27,308
  35,026
  44,112
  54,630
  66,627
  80,129
  95,143
  111,664
  129,673
  149,143
  170,043
  192,340
  215,999
  240,992
  267,293
  294,884
  323,754
  353,899
  385,325
  418,047
  452,087
  487,479
  524,263
  562,487
  602,210
  643,496
Total equity, $m
  4,869
  6,839
  9,364
  12,522
  16,385
  21,016
  26,467
  32,778
  39,976
  48,077
  57,086
  66,998
  77,804
  89,486
  102,026
  115,404
  129,599
  144,595
  160,376
  176,930
  194,252
  212,339
  231,195
  250,828
  271,252
  292,487
  314,558
  337,492
  361,326
  386,098
Total liabilities and equity, $m
  12,984
  18,238
  24,971
  33,391
  43,693
  56,042
  70,579
  87,408
  106,603
  128,206
  152,229
  178,662
  207,477
  238,629
  272,069
  307,744
  345,598
  385,587
  427,669
  471,814
  518,006
  566,238
  616,520
  668,875
  723,339
  779,966
  838,821
  899,979
  963,536
  1,029,594
Debt-to-equity ratio
  1.150
  1.300
  1.400
  1.470
  1.510
  1.550
  1.570
  1.590
  1.600
  1.610
  1.620
  1.630
  1.630
  1.640
  1.640
  1.640
  1.650
  1.650
  1.650
  1.650
  1.650
  1.650
  1.660
  1.660
  1.660
  1.660
  1.660
  1.660
  1.660
  1.660
Adjusted equity ratio
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375
  0.375

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  688
  1,090
  1,602
  2,237
  3,011
  3,933
  5,013
  6,257
  7,670
  9,254
  11,435
  13,360
  15,452
  17,709
  20,125
  22,698
  25,423
  28,298
  31,320
  34,487
  37,797
  41,252
  44,851
  48,597
  52,493
  56,543
  60,752
  65,125
  69,670
  74,394
Depreciation, amort., depletion, $m
  1,488
  1,854
  2,323
  2,909
  3,627
  4,487
  5,500
  6,673
  8,010
  9,515
  10,606
  12,447
  14,455
  16,625
  18,955
  21,440
  24,078
  26,864
  29,796
  32,871
  36,089
  39,450
  42,953
  46,600
  50,395
  54,340
  58,440
  62,701
  67,129
  71,731
Funds from operations, $m
  2,176
  2,944
  3,924
  5,147
  6,638
  8,420
  10,513
  12,930
  15,680
  18,769
  22,041
  25,807
  29,907
  34,334
  39,080
  44,138
  49,501
  55,162
  61,116
  67,358
  73,886
  80,701
  87,804
  95,197
  102,888
  110,883
  119,192
  127,826
  136,799
  146,125
Change in working capital, $m
  -528
  -695
  -891
  -1,114
  -1,363
  -1,634
  -1,924
  -2,227
  -2,540
  -2,859
  -3,179
  -3,498
  -3,813
  -4,122
  -4,425
  -4,721
  -5,009
  -5,292
  -5,569
  -5,842
  -6,112
  -6,382
  -6,654
  -6,928
  -7,207
  -7,493
  -7,788
  -8,093
  -8,410
  -8,741
Cash from operations, $m
  2,704
  3,639
  4,815
  6,261
  8,001
  10,055
  12,437
  15,157
  18,220
  21,628
  25,220
  29,305
  33,720
  38,456
  43,505
  48,859
  54,510
  60,454
  66,684
  73,199
  79,999
  87,084
  94,457
  102,125
  110,095
  118,376
  126,980
  135,919
  145,209
  154,866
Maintenance CAPEX, $m
  -627
  -905
  -1,271
  -1,740
  -2,326
  -3,044
  -3,904
  -4,917
  -6,090
  -7,427
  -8,932
  -10,606
  -12,447
  -14,455
  -16,625
  -18,955
  -21,440
  -24,078
  -26,864
  -29,796
  -32,871
  -36,089
  -39,450
  -42,953
  -46,600
  -50,395
  -54,340
  -58,440
  -62,701
  -67,129
New CAPEX, $m
  -2,780
  -3,660
  -4,690
  -5,867
  -7,177
  -8,604
  -10,128
  -11,725
  -13,373
  -15,050
  -16,737
  -18,416
  -20,075
  -21,704
  -23,298
  -24,854
  -26,374
  -27,860
  -29,318
  -30,756
  -32,181
  -33,603
  -35,031
  -36,475
  -37,946
  -39,452
  -41,003
  -42,609
  -44,280
  -46,022
Cash from investing activities, $m
  -3,407
  -4,565
  -5,961
  -7,607
  -9,503
  -11,648
  -14,032
  -16,642
  -19,463
  -22,477
  -25,669
  -29,022
  -32,522
  -36,159
  -39,923
  -43,809
  -47,814
  -51,938
  -56,182
  -60,552
  -65,052
  -69,692
  -74,481
  -79,428
  -84,546
  -89,847
  -95,343
  -101,049
  -106,981
  -113,151
Free cash flow, $m
  -703
  -926
  -1,146
  -1,345
  -1,502
  -1,593
  -1,595
  -1,485
  -1,243
  -850
  -449
  283
  1,198
  2,297
  3,582
  5,050
  6,697
  8,516
  10,502
  12,648
  14,946
  17,391
  19,976
  22,697
  25,549
  28,530
  31,637
  34,870
  38,229
  41,715
Issuance/(repayment) of debt, $m
  2,495
  3,283
  4,208
  5,263
  6,438
  7,719
  9,085
  10,518
  11,997
  13,502
  15,014
  16,521
  18,009
  19,470
  20,900
  22,296
  23,660
  24,993
  26,301
  27,591
  28,870
  30,145
  31,426
  32,722
  34,041
  35,392
  36,784
  38,225
  39,723
  41,286
Issuance/(repurchase) of shares, $m
  811
  880
  923
  920
  852
  698
  438
  54
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,306
  4,163
  5,131
  6,183
  7,290
  8,417
  9,523
  10,572
  11,997
  13,502
  15,014
  16,521
  18,009
  19,470
  20,900
  22,296
  23,660
  24,993
  26,301
  27,591
  28,870
  30,145
  31,426
  32,722
  34,041
  35,392
  36,784
  38,225
  39,723
  41,286
Total cash flow (excl. dividends), $m
  2,604
  3,238
  3,985
  4,838
  5,788
  6,823
  7,928
  9,087
  10,754
  12,652
  14,565
  16,804
  19,207
  21,768
  24,482
  27,346
  30,356
  33,509
  36,803
  40,239
  43,816
  47,536
  51,403
  55,419
  59,590
  63,922
  68,420
  73,094
  77,951
  83,001
Retained Cash Flow (-), $m
  -1,499
  -1,970
  -2,525
  -3,158
  -3,863
  -4,631
  -5,451
  -6,311
  -7,198
  -8,101
  -9,009
  -9,912
  -10,805
  -11,682
  -12,540
  -13,378
  -14,196
  -14,996
  -15,781
  -16,555
  -17,322
  -18,087
  -18,856
  -19,633
  -20,424
  -21,235
  -22,070
  -22,935
  -23,834
  -24,772
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  41
  59
  83
  113
  151
  198
  254
  319
  395
  482
  580
  689
  808
  939
  1,080
  1,231
  1,392
  1,563
  1,744
  1,935
  2,134
  2,343
  2,562
  2,789
  3,026
  3,272
  3,529
  3,795
  4,072
  4,359
Cash available for distribution, $m
  1,104
  1,268
  1,460
  1,680
  1,925
  2,192
  2,477
  2,776
  3,556
  4,551
  5,556
  6,892
  8,401
  10,086
  11,942
  13,969
  16,160
  18,513
  21,023
  23,684
  26,494
  29,449
  32,547
  35,786
  39,166
  42,687
  46,350
  50,159
  54,118
  58,229
Discount rate, %
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
  1,034
  1,104
  1,176
  1,241
  1,294
  1,330
  1,345
  1,336
  1,502
  1,669
  1,750
  1,841
  1,879
  1,863
  1,796
  1,684
  1,537
  1,365
  1,180
  993
  813
  648
  502
  377
  275
  195
  134
  89
  57
  35
Current shareholders' claim on cash, %
  93.0
  88.1
  84.5
  82.0
  80.3
  79.3
  78.8
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7
  78.7

Leidos Holdings, Inc., a science and technology company, provides technology and engineering solutions in the defense, intelligence, homeland security, civil, and health markets in the United States and internationally. The company operates through National Security Solutions (NSS), Information Systems & Global Solutions (IS&GS), and Health and Infrastructure (HIS) segments. The NSS segment offers national security solutions and systems for air, land, sea, space, and cyberspace for the U.S. intelligence community, the U.S. Department of Defense (DoD), military services, the U.S. Department of Homeland Security, and government agencies of U.S. allies abroad, as well as other federal, civilian, and commercial customers in the national security industry. Its solutions offer technology, intelligence systems, command and control, data analytics, logistics, cybersecurity, and intelligence analysis and operations support services to critical missions. The IS&GS segment provides information technology (IT), management and engineering services to civil, defense, and intelligence agencies of the U.S. Government; and data analytics, systems engineering, agile software development, network-enabled situational awareness, communications, command and control, and systems integration solutions. The HIS segment offers electronic health record (EHR) systems, as well as IT, scientific support, and behavior health services; implements and optimizes EHR systems at commercial hospitals; and provides life science research and development support services. This segment also provides security products, services, and solutions; power grid engineering services and solutions; federal environmental and engineering services; and transaction and asset valuation services for the power industry. Leidos Holdings, Inc. was founded in 1969 and is headquartered in Reston, Virginia.

FINANCIAL RATIOS  of  Leidos Holdings (LDOS)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

LDOS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LDOS stock intrinsic value calculation we used $10170 million for the last fiscal year's total revenue generated by Leidos Holdings. The default revenue input number comes from 2017 income statement of Leidos Holdings. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LDOS stock valuation model: a) initial revenue growth rate of 44.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.8%, whose default value for LDOS is calculated based on our internal credit rating of Leidos Holdings, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Leidos Holdings.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LDOS stock the variable cost ratio is equal to 94.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for LDOS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Leidos Holdings.

Corporate tax rate of 27% is the nominal tax rate for Leidos Holdings. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LDOS stock is equal to 0.4%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LDOS are equal to 61.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Leidos Holdings operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LDOS is equal to -11.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3370 million for Leidos Holdings - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 151 million for Leidos Holdings is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Leidos Holdings at the current share price and the inputted number of shares is $10.8 billion.

COMPANY NEWS

▶ For Perspecta, the stakes are high for a huge Navy contract recompete   [Aug-15-18 05:43PM  American City Business Journals]
▶ Exclusive: CACI acquiring General Dynamics business unit   [Aug-14-18 03:09PM  American City Business Journals]
▶ Engility CFO: Our scale is great for the market that were targeting   [Aug-08-18 02:46PM  American City Business Journals]
▶ Inside the list: A closer look at C. Fla.'s MS&T industry   [10:27AM  American City Business Journals]
▶ Leidos taps new senior executive to lead M&A strategy   [Aug-06-18 05:34PM  American City Business Journals]
▶ An Investor's Primer on the Defense Sector   [Aug-02-18 04:50PM  Motley Fool]
▶ Leidos Holdings, Inc. Declares Quarterly Cash Dividend   [Jul-31-18 04:15PM  PR Newswire]
▶ Canceled TSA contract could be back up for grabs soon and Leidos plans to go for it   [Jul-26-18 05:14PM  American City Business Journals]
▶ Leidos: 2Q Earnings Snapshot   [06:48AM  Associated Press]
▶ The everything contractor: Amazon Web Services takes over Washington   [Jul-20-18 06:00AM  American City Business Journals]
▶ Why are bidders lining up for Engility? Bigger is better.   [Jul-12-18 02:14PM  American City Business Journals]
▶ How defense contractors almost came together to rename Nationals Park   [Jul-03-18 01:46PM  American City Business Journals]
▶ Exclusive: $578 million Peraton contract is terminated   [Jun-21-18 01:36PM  American City Business Journals]
▶ Leidos CEO Speaks Out on Border Policies   [11:26AM  Barrons.com]
▶ [$$] CATL/electric vehicles: power play   [Jun-10-18 09:53PM  Financial Times]
▶ Leidos selling its commercial cyber arm to Capgemini   [11:22AM  American City Business Journals]
▶ Leidos Launches the Leidos Alliance Partner Network   [May-30-18 12:00PM  PR Newswire]
▶ Leidos Climbs into Top 300 in 2018 Fortune 500 List   [May-29-18 04:15PM  PR Newswire]
▶ How Leidos basks in the halo effect of the Capitals' Stanley Cup run   [08:21AM  American City Business Journals]
▶ 11 Greater Washington companies win spots on $1B military health contract   [May-25-18 02:32PM  American City Business Journals]
▶ Leidos Named 'Best for Vets' Employer by Military Times   [May-15-18 06:15AM  PR Newswire]
▶ Leidos Holdings, Inc. Declares Quarterly Cash Dividend   [May-11-18 04:15PM  PR Newswire]
▶ Chief Executive magazine has named this local exec CEO of the year   [May-08-18 03:09PM  American City Business Journals]
▶ Timing is everything: What Leidos is seeing with contract awards, and why it's pleased   [May-04-18 02:47PM  American City Business Journals]
▶ CACI: We are not consumed by the notion of scale   [May-03-18 02:47PM  American City Business Journals]
▶ Leidos: 1Q Earnings Snapshot   [06:26AM  Associated Press]
▶ This government contracting executives pay has jumped 67 percent in four years   [Apr-30-18 08:53PM  American City Business Journals]
▶ BAE Systems mulling office consolidation, HQ move   [Apr-26-18 02:41PM  American City Business Journals]
▶ Leidos Named to Military Times Best for VETS Index   [Apr-19-18 06:15AM  PR Newswire]
▶ Why Intelsat Stock Just Popped (Another) 10%   [Apr-16-18 01:42PM  Motley Fool]
▶ SAIC is 'very comfortable' at its size as competitors scale up   [Mar-29-18 02:31PM  American City Business Journals]
▶ CACI withdraws offer to acquire CSRA   [08:37AM  American City Business Journals]
▶ Raytheon's big bet in government services is on itself. Don't expect a major M&A play.   [Mar-27-18 04:17PM  American City Business Journals]
▶ U.S. Army Awards Leidos Munitions Services Contract   [Mar-26-18 06:45AM  PR Newswire]
▶ Leidos wins IT modernization work worth up to $472M   [Mar-14-18 06:40PM  American City Business Journals]
▶ What's working: Defense stock plays   [Mar-12-18 07:46AM  CNBC Videos]
▶ DXC Technology's public sector business spinout now has a name   [Mar-08-18 05:00PM  American City Business Journals]
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