Intrinsic value of Leidos Holdings, Inc. - LDOS

Previous Close

$63.49

  Intrinsic Value

$55.53

stock screener

  Rating & Target

hold

-13%

Previous close

$63.49

 
Intrinsic value

$55.53

 
Up/down potential

-13%

 
Rating

hold

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 0001), $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 9.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
Revenue, $m
  10,724
  11,280
  11,862
  12,472
  13,112
  13,783
  14,487
  15,225
  16,000
  16,812
  17,664
  18,559
  19,497
  20,482
  21,515
  22,600
  23,738
  24,933
  26,187
  27,504
  28,886
  30,336
  31,859
  33,458
  35,136
  36,898
  38,747
  40,689
  42,728
  44,868
Variable operating expenses, $m
  10,116
  10,612
  11,131
  11,676
  12,246
  12,845
  13,473
  14,131
  14,822
  15,546
  15,755
  16,553
  17,390
  18,268
  19,190
  20,158
  21,173
  22,239
  23,357
  24,531
  25,764
  27,058
  28,416
  29,842
  31,339
  32,910
  34,560
  36,292
  38,110
  40,019
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
  10,116
  10,612
  11,131
  11,676
  12,246
  12,845
  13,473
  14,131
  14,822
  15,546
  15,755
  16,553
  17,390
  18,268
  19,190
  20,158
  21,173
  22,239
  23,357
  24,531
  25,764
  27,058
  28,416
  29,842
  31,339
  32,910
  34,560
  36,292
  38,110
  40,019
Operating income, $m
  608
  668
  731
  797
  866
  938
  1,014
  1,094
  1,178
  1,266
  1,909
  2,006
  2,107
  2,214
  2,325
  2,442
  2,565
  2,695
  2,830
  2,972
  3,122
  3,278
  3,443
  3,616
  3,797
  3,988
  4,187
  4,397
  4,618
  4,849
EBITDA, $m
  1,299
  1,367
  1,437
  1,511
  1,589
  1,670
  1,755
  1,845
  1,938
  2,037
  2,140
  2,249
  2,362
  2,482
  2,607
  2,738
  2,876
  3,021
  3,173
  3,332
  3,500
  3,675
  3,860
  4,054
  4,257
  4,470
  4,695
  4,930
  5,177
  5,436
Interest expense (income), $m
  0
  169
  184
  200
  217
  235
  253
  273
  293
  315
  337
  360
  385
  411
  438
  467
  497
  528
  561
  596
  632
  670
  710
  752
  796
  842
  891
  942
  996
  1,052
  1,111
Earnings before tax, $m
  439
  484
  530
  580
  631
  685
  742
  801
  863
  929
  1,549
  1,620
  1,696
  1,775
  1,858
  1,946
  2,037
  2,134
  2,234
  2,340
  2,452
  2,568
  2,691
  2,820
  2,955
  3,097
  3,245
  3,402
  3,566
  3,738
Tax expense, $m
  119
  131
  143
  156
  170
  185
  200
  216
  233
  251
  418
  438
  458
  479
  502
  525
  550
  576
  603
  632
  662
  693
  727
  761
  798
  836
  876
  918
  963
  1,009
Net income, $m
  321
  353
  387
  423
  461
  500
  541
  585
  630
  678
  1,130
  1,183
  1,238
  1,296
  1,357
  1,420
  1,487
  1,557
  1,631
  1,709
  1,790
  1,875
  1,964
  2,058
  2,157
  2,261
  2,369
  2,483
  2,603
  2,729

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
  9,229
  9,707
  10,208
  10,733
  11,284
  11,862
  12,467
  13,103
  13,769
  14,468
  15,202
  15,971
  16,779
  17,626
  18,516
  19,449
  20,429
  21,457
  22,536
  23,669
  24,859
  26,107
  27,417
  28,793
  30,237
  31,754
  33,345
  35,017
  36,771
  38,613
Adjusted assets (=assets-cash), $m
  9,229
  9,707
  10,208
  10,733
  11,284
  11,862
  12,467
  13,103
  13,769
  14,468
  15,202
  15,971
  16,779
  17,626
  18,516
  19,449
  20,429
  21,457
  22,536
  23,669
  24,859
  26,107
  27,417
  28,793
  30,237
  31,754
  33,345
  35,017
  36,771
  38,613
Revenue / Adjusted assets
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
  1.162
Average production assets, $m
  3,228
  3,395
  3,570
  3,754
  3,947
  4,149
  4,361
  4,583
  4,816
  5,060
  5,317
  5,586
  5,869
  6,165
  6,476
  6,803
  7,145
  7,505
  7,882
  8,279
  8,695
  9,131
  9,590
  10,071
  10,576
  11,106
  11,663
  12,247
  12,861
  13,505
Working capital, $m
  558
  587
  617
  649
  682
  717
  753
  792
  832
  874
  919
  965
  1,014
  1,065
  1,119
  1,175
  1,234
  1,297
  1,362
  1,430
  1,502
  1,577
  1,657
  1,740
  1,827
  1,919
  2,015
  2,116
  2,222
  2,333
Total debt, $m
  3,412
  3,709
  4,022
  4,349
  4,692
  5,052
  5,429
  5,825
  6,240
  6,676
  7,133
  7,612
  8,115
  8,643
  9,197
  9,779
  10,389
  11,030
  11,702
  12,408
  13,149
  13,927
  14,743
  15,600
  16,500
  17,445
  18,436
  19,477
  20,570
  21,718
Total liabilities, $m
  5,750
  6,047
  6,360
  6,687
  7,030
  7,390
  7,767
  8,163
  8,578
  9,014
  9,471
  9,950
  10,453
  10,981
  11,535
  12,117
  12,727
  13,368
  14,040
  14,746
  15,487
  16,265
  17,081
  17,938
  18,838
  19,783
  20,774
  21,815
  22,908
  24,056
Total equity, $m
  3,479
  3,660
  3,848
  4,046
  4,254
  4,472
  4,700
  4,940
  5,191
  5,455
  5,731
  6,021
  6,326
  6,645
  6,980
  7,332
  7,702
  8,089
  8,496
  8,923
  9,372
  9,842
  10,336
  10,855
  11,400
  11,971
  12,571
  13,201
  13,863
  14,557
Total liabilities and equity, $m
  9,229
  9,707
  10,208
  10,733
  11,284
  11,862
  12,467
  13,103
  13,769
  14,469
  15,202
  15,971
  16,779
  17,626
  18,515
  19,449
  20,429
  21,457
  22,536
  23,669
  24,859
  26,107
  27,417
  28,793
  30,238
  31,754
  33,345
  35,016
  36,771
  38,613
Debt-to-equity ratio
  0.980
  1.010
  1.050
  1.070
  1.100
  1.130
  1.160
  1.180
  1.200
  1.220
  1.240
  1.260
  1.280
  1.300
  1.320
  1.330
  1.350
  1.360
  1.380
  1.390
  1.400
  1.410
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.480
  1.490
Adjusted equity ratio
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  321
  353
  387
  423
  461
  500
  541
  585
  630
  678
  1,130
  1,183
  1,238
  1,296
  1,357
  1,420
  1,487
  1,557
  1,631
  1,709
  1,790
  1,875
  1,964
  2,058
  2,157
  2,261
  2,369
  2,483
  2,603
  2,729
Depreciation, amort., depletion, $m
  692
  699
  706
  714
  723
  732
  741
  750
  761
  771
  231
  243
  255
  268
  282
  296
  311
  326
  343
  360
  378
  397
  417
  438
  460
  483
  507
  532
  559
  587
Funds from operations, $m
  1,012
  1,052
  1,094
  1,137
  1,183
  1,232
  1,282
  1,335
  1,391
  1,449
  1,362
  1,426
  1,493
  1,564
  1,638
  1,716
  1,798
  1,884
  1,974
  2,068
  2,168
  2,272
  2,381
  2,496
  2,617
  2,743
  2,876
  3,016
  3,162
  3,316
Change in working capital, $m
  28
  29
  30
  32
  33
  35
  37
  38
  40
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  92
  96
  101
  106
  111
Cash from operations, $m
  985
  1,023
  1,063
  1,106
  1,150
  1,197
  1,246
  1,297
  1,351
  1,407
  1,317
  1,379
  1,444
  1,513
  1,585
  1,660
  1,739
  1,822
  1,909
  2,000
  2,096
  2,197
  2,302
  2,413
  2,530
  2,652
  2,780
  2,915
  3,056
  3,205
Maintenance CAPEX, $m
  -133
  -140
  -148
  -155
  -163
  -172
  -180
  -190
  -199
  -209
  -220
  -231
  -243
  -255
  -268
  -282
  -296
  -311
  -326
  -343
  -360
  -378
  -397
  -417
  -438
  -460
  -483
  -507
  -532
  -559
New CAPEX, $m
  -158
  -167
  -175
  -184
  -193
  -202
  -212
  -222
  -233
  -245
  -257
  -269
  -282
  -296
  -311
  -326
  -343
  -360
  -377
  -396
  -416
  -437
  -458
  -481
  -505
  -530
  -557
  -585
  -614
  -644
Cash from investing activities, $m
  -291
  -307
  -323
  -339
  -356
  -374
  -392
  -412
  -432
  -454
  -477
  -500
  -525
  -551
  -579
  -608
  -639
  -671
  -703
  -739
  -776
  -815
  -855
  -898
  -943
  -990
  -1,040
  -1,092
  -1,146
  -1,203
Free cash flow, $m
  693
  715
  740
  767
  794
  823
  853
  885
  918
  953
  841
  879
  919
  961
  1,005
  1,052
  1,100
  1,151
  1,205
  1,261
  1,320
  1,382
  1,447
  1,515
  1,587
  1,662
  1,740
  1,823
  1,910
  2,001
Issuance/(repayment) of debt, $m
  288
  298
  312
  327
  343
  360
  377
  396
  415
  436
  457
  479
  503
  528
  554
  582
  610
  641
  672
  706
  741
  778
  816
  857
  900
  945
  992
  1,041
  1,093
  1,148
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  288
  298
  312
  327
  343
  360
  377
  396
  415
  436
  457
  479
  503
  528
  554
  582
  610
  641
  672
  706
  741
  778
  816
  857
  900
  945
  992
  1,041
  1,093
  1,148
Total cash flow (excl. dividends), $m
  981
  1,013
  1,053
  1,094
  1,137
  1,183
  1,231
  1,281
  1,333
  1,389
  1,298
  1,358
  1,422
  1,489
  1,559
  1,633
  1,711
  1,792
  1,877
  1,967
  2,061
  2,160
  2,263
  2,372
  2,486
  2,606
  2,732
  2,864
  3,003
  3,149
Retained Cash Flow (-), $m
  -171
  -180
  -189
  -198
  -208
  -218
  -228
  -240
  -251
  -264
  -277
  -290
  -304
  -319
  -335
  -352
  -369
  -388
  -407
  -427
  -448
  -471
  -494
  -519
  -544
  -572
  -600
  -630
  -661
  -694
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
  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 available for distribution, $m
  809
  833
  864
  896
  930
  965
  1,002
  1,041
  1,082
  1,125
  1,021
  1,068
  1,118
  1,170
  1,224
  1,281
  1,341
  1,404
  1,470
  1,540
  1,613
  1,689
  1,769
  1,853
  1,942
  2,035
  2,132
  2,234
  2,342
  2,454
Discount rate, %
  6.60
  6.93
  7.28
  7.64
  8.02
  8.42
  8.84
  9.29
  9.75
  10.24
  10.75
  11.29
  11.85
  12.45
  13.07
  13.72
  14.41
  15.13
  15.88
  16.68
  17.51
  18.39
  19.31
  20.27
  21.29
  22.35
  23.47
  24.64
  25.87
  27.17
PV of cash for distribution, $m
  759
  729
  700
  667
  632
  594
  554
  512
  468
  424
  332
  296
  261
  226
  194
  164
  136
  111
  89
  70
  54
  41
  31
  22
  16
  11
  7
  5
  3
  2
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

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, Inc. (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 $10194 million for the last fiscal year's total revenue generated by Leidos Holdings, Inc.. The default revenue input number comes from 0001 income statement of Leidos Holdings, Inc.. 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 5.2% 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 6.6%, whose default value for LDOS is calculated based on our internal credit rating of Leidos Holdings, Inc., 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, Inc..
    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 94.6%.

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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Leidos Holdings, Inc.. 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%.

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 30.1%.

Life of production assets of 23 years is the average useful life of capital assets used in Leidos Holdings, Inc. 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 5.2%. 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 - $3308 million for Leidos Holdings, Inc. - 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 146.109 million for Leidos Holdings, Inc. 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, Inc. at the current share price and the inputted number of shares is $9.3 billion.

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