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NEW YORK (TheStreet) -- Leidos Holdings (LDOS) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate LEIDOS HOLDINGS INC (LDOS) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the IT Services industry. The net income has significantly decreased by 1142.8% when compared to the same quarter one year ago, falling from $42.00 million to -$438.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, LEIDOS HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $122.00 million or 44.29% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The gross profit margin for LEIDOS HOLDINGS INC is rather low; currently it is at 15.47%. Regardless of LDOS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LDOS's net profit margin of -33.53% significantly underperformed when compared to the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.51%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 7512.50% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: LDOS Ratings Report
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