Revealed: Dylan Jovine’s “UFO Weapon” Stock

Dylan Jovine is back with another stock teaser.

This time he's going back to the defense industry to tease a stock he calls "the military's secret UFO weapon."

He claims one company is developing weaponry so advanced it can make their stock grow 35,000%!

Of course, Jovine wants you to give him money to learn this stock, but he left enough clues in the presentation to figure it out.

I reveal the name of the company that Dylan is pitching and give you some information on the stock so you can determine if it's worth investing in.

Let's get started!

What is Leidos?

The company Jovine is pitching is clearly Leidos.

Here's a complete breakdown of who they are and what they do:

Leidos is a Fortune 500 technology, engineering, and science company that provides innovative solutions to the world's toughest challenges. Leidos works across the commercial, civil, defense, and intelligence sectors, and its 37,000 employees are united by a common mission: to make the world safer, healthier, and more efficient.

Leidos' core capabilities include:

• Full-spectrum cyber: Leidos is a recognized leader in cybersecurity, with nearly 3,000 cybersecurity professionals who help customers across the federal government defend their networks and data.
• Digital modernization: Leidos delivers mission-focused digital modernization solutions, including cloud services, enterprise IT solutions, and data center modernization.
• Trusted artificial intelligence (AI): Leidos helps customers adopt AI and machine learning solutions that turn data into new opportunities for insight and efficiency.
• Secure, rapid software: Leidos develops and delivers secure, rapid software solutions that meet the complex and evolving needs of its customers.

Leidos' solutions are used by a wide range of customers, including the U.S. Department of Defense, the U.S. Intelligence Community, other federal agencies, state and local governments, and commercial organizations.

Here are some examples of Leidos' work:

• Leidos is a major contractor on the NASA Artemis program to return astronauts to the moon.
• Leidos provides cybersecurity solutions to the U.S. Department of Defense, including the development and operation of the Joint DoD Cyber Command's Information Networks Defense Operations Center.
• Leidos is helping the U.S. Department of Veterans Affairs modernize its electronic health record system.
• Leidos is developing and delivering artificial intelligence solutions to help the U.S. Department of Energy improve the efficiency of its power grid.
• Leidos is working with commercial customers to develop and deploy secure, rapid software solutions for a variety of industries, including healthcare, financial services, and telecommunications.

Leidos is a leading provider of innovative solutions to the world's toughest challenges. The company's core capabilities in full-spectrum cyber, digital modernization, trusted AI, and secure, rapid software enable it to deliver mission-critical solutions to its customers across the commercial, civil, defense, and intelligence sectors.

Leidos Stock Breakdown

Here's a complete breakdown of this stock so you can determine if it's worth investing in:

Leidos Company Fundamentals

• Revenue: $14.8 billion (TTM)
• Operating margin: 7.9% (TTM)
• Debt-to-equity ratio: 113.62
• Return on equity: 13.1% (TTM)
• Free cash flow: $1.9 billion (TTM)
• Earnings per share: $4.32 (TTM)

Overall, Leidos has strong company fundamentals. It has a large and growing revenue base, solid operating margins, and a healthy debt-to-equity ratio. Additionally, Leidos is generating significant free cash flow, which gives it the financial flexibility to invest in growth and return capital to shareholders.

Here is a more detailed breakdown of each of Leidos' key fundamentals:

• Revenue: Leidos' revenue has grown steadily in recent years, and it is expected to continue to grow in the future. Leidos' customers include the US government and commercial customers in the defense, intelligence, civil, and health markets. These markets are all expected to grow in the coming years, which bodes well for Leidos' revenue growth.
• Operating margin: Leidos' operating margin is slightly above the industry average. This indicates that Leidos is efficient in its operations and that it is able to control its costs.
• Debt-to-equity ratio: Leidos' debt-to-equity ratio is slightly above the industry average. However, it is still considered to be below average overall. This indicates that Leidos has a healthy balance sheet and that it is not overly reliant on debt to finance its operations.
• Return on equity: Leidos' return on equity is above the industry average. This indicates that Leidos is generating a high return on its shareholders' investment.
• Free cash flow: Leidos is generating significant free cash flow. This gives the company the financial flexibility to invest in growth and return capital to shareholders.
• Earnings per share: Leidos' earnings per share are above the industry average. This indicates that the company is profitable and that it is generating strong returns for its shareholders.

Overall, Leidos has a strong financial foundation and is well-positioned for future growth. Investors should carefully consider Leidos' company fundamentals before making an investment decision.

Inudstry and Competitive Advantage

Industry: Leidos is a Fortune 500 company that provides science, technology, engineering, and analytics solutions in the defense, intelligence, civil, and health markets.

Competitive Advantage: Leidos' competitive advantages include:

• Deep expertise in mission-critical technologies: Leidos has a deep understanding of complex technologies, such as artificial intelligence, machine learning, cybersecurity, and cloud computing. This expertise allows Leidos to develop and deliver innovative solutions to its customers' most challenging problems.
• Broad range of capabilities: Leidos offers a wide range of capabilities, from systems engineering and integration to software development and maintenance to cyber operations and intelligence analysis. This allows Leidos to provide its customers with comprehensive solutions that meet their specific needs.
• Global reach: Leidos has a global presence, with offices in over 30 countries. This gives Leidos the ability to serve its customers around the world.
• Strong customer relationships: Leidos has a long history of working with its customers to develop and deliver solutions that meet their needs. This has led to strong customer relationships and a high level of customer satisfaction.

In addition to these general competitive advantages, Leidos also has a number of specific competitive advantages in key areas such as:

• Cybersecurity: Leidos is a leading provider of cybersecurity solutions, with a strong track record of success in protecting critical infrastructure and government systems.
• AI/ML: Leidos is investing heavily in AI/ML, and has developed a number of innovative AI/ML solutions for its customers.
• Cloud computing: Leidos is a leading provider of cloud computing solutions, and helps its customers to migrate to and manage their workloads in the cloud.

Overall, Leidos is a well-positioned company with a strong competitive advantage in the defense, intelligence, civil, and health markets.

Here are some specific examples of how Leidos' competitive advantages have helped it to win contracts and deliver successful outcomes for its customers:

• In 2022, Leidos was awarded a contract to develop and deliver a new cybersecurity system for the US Department of Defense. Leidos' deep expertise in cybersecurity and its strong track record in delivering mission-critical systems were key factors in winning this contract.
• In 2023, Leidos was awarded a contract to develop and deploy a new AI/ML-powered system for the US Department of Homeland Security. Leidos' investment in AI/ML and its ability to develop innovative solutions were key factors in winning this contract.
• In 2022, Leidos helped the US Centers for Disease Control and Prevention (CDC) to migrate its workloads to the cloud. Leidos' expertise in cloud computing and its proven ability to help customers migrate to the cloud were key factors in helping the CDC to achieve its cloud migration goals.

These examples demonstrate how Leidos' competitive advantages are helping it to deliver innovative and effective solutions to its customers in a variety of markets.

Valuation

Leidos has several valuation advantages over its peers, including:

• Revenue diversification: Leidos has a diversified revenue stream, with exposure to both the government and commercial markets. This diversification helps to reduce the company's risk and provides a more stable foundation for growth.
• Strong backlog: Leidos has a strong backlog of contracts, which provides visibility into future revenue and earnings. This is important for investors, as it shows that the company has a steady pipeline of work and is well-positioned for growth.
• Investment in innovation: Leidos is investing heavily in innovation, which is helping the company to maintain its competitive edge. This investment is paying off, as Leidos is winning new contracts and expanding into new markets.
• Strong balance sheet: Leidos has a strong balance sheet, with low debt levels and ample cash on hand. This gives the company the financial flexibility to invest in growth and pursue new opportunities.

In addition to these valuation advantages, Leidos is also benefiting from a number of secular trends, such as the growth of the defense budget, the increasing demand for cybersecurity services, and the need for technology solutions to address complex challenges such as climate change and pandemics.

As a result of these factors, many analysts believe that Leidos is undervalued relative to its peers. For example, a recent DCF analysis by ValueInvesting.io valued Leidos at $112.51 per share, which is a premium of 15.2% to its current share price.

Dividend

Leidos pays a quarterly dividend of $0.36 per share. The most recent dividend was paid on September 29, 2023.

Leidos has a dividend yield of 1.57% as of October 26, 2023. This means that for every $100 invested in Leidos stock, investors would receive $1.57 in dividends each year.

Leidos has a strong track record of dividend payments. The company has paid a dividend every quarter since 2013.

Investors who are looking for a dividend-paying stock with a strong track record may want to consider investing in Leidos.

Long Term vs. Short Term Prospects

Long-term prospects

Leidos is a large and diversified defense contractor with a strong track record of performance. The company has a broad portfolio of capabilities, including engineering, IT, and intelligence services. This gives Leidos a strong position to compete for contracts in a wide range of areas, including national security, intelligence, and space.

In the long term, Leidos is well-positioned to benefit from a number of trends, including:

• Increased defense spending: The US government is expected to increase defense spending in the coming years, which will create opportunities for Leidos and other defense contractors.
• Technological innovation: Leidos is investing heavily in new technologies, such as artificial intelligence and machine learning. These technologies are transforming the defense industry, and Leidos is well-positioned to capitalize on this trend.
• Globalization: Leidos is expanding its global presence, which gives the company access to new markets and opportunities.

Short-term prospects

Leidos' short-term prospects are more mixed. The company is facing a number of challenges, including:

• Increased competition: The defense industry is becoming increasingly competitive, as more companies are competing for contracts.
• Budget uncertainty: The US government's budget is uncertain, which could lead to delays or cancellations of contracts.
• Supply chain disruptions: The global supply chain is facing disruptions, which could impact Leidos' ability to deliver on its contracts.

Despite these challenges, Leidos is still a well-managed company with a strong balance sheet. The company is also investing in new capabilities and technologies, which should position it well for the long term.

Overall, Leidos has good long-term prospects, but its short-term prospects are more mixed. Investors should carefully consider the risks and rewards before investing in Leidos stock.

Here are some specific factors that could impact Leidos' short-term performance:

• The outcome of the US presidential election in 2024.
• The level of defense spending in the US budget.
• The pace of technological innovation in the defense industry.
• The global economic outlook.
• The health of the supply chain.

Investors should monitor these factors closely and adjust their investment strategy accordingly.

Pros of investing in Leidos:

• Market leader: Leidos is a leading provider of government services in the United States, with revenues of over $14 billion in 2022.
• Diverse revenue streams: Leidos' revenue comes from a variety of sources, including defense, intelligence, health, civilian, and commercial markets. This diversification helps to reduce the company's risk.
• Strong cash generation: Leidos generates strong cash flow from operations, which gives it the flexibility to invest in new growth opportunities and return capital to shareholders through dividends and share repurchases.
• Dividend: Leidos pays a quarterly dividend to shareholders, with a current yield of 1.5%.
• Strong balance sheet: Leidos has a strong balance sheet with low debt levels. This gives the company the financial flexibility to weather economic downturns and pursue growth opportunities.
• Investment in innovation: Leidos invests heavily in research and development, which helps the company to stay ahead of the curve in a rapidly changing industry.
• Government spending: The US government is a major customer for Leidos, and government spending is expected to grow in the coming years.

Additional pros:

• Experienced management team: Leidos has a strong and experienced management team with a track record of success.
• Strong customer relationships: Leidos has long-standing relationships with many of its customers, which gives the company a competitive advantage.
• Committed to corporate social responsibility: Leidos is committed to corporate social responsibility, and the company has a number of programs in place to support its employees, communities, and the environment.

Overall, Leidos is a well-established company with a strong track record of performance. The company is well-positioned to benefit from continued growth in government spending and its investments in innovation.

Cons of Investing In Leidos

Here are some of the potential cons of investing in Leidos:

• Government contract risk: Leidos's business is heavily reliant on government contracts, which can be subject to changes in funding levels and priorities. This could make Leidos's financial performance more volatile than companies with a more diversified customer base.
• Cybersecurity risks: Leidos is a major player in the cybersecurity industry, which means it is a potential target for data breaches and cyberattacks. If Leidos were to experience a major security incident, it could damage its reputation and financial performance.
• Competition from larger rivals: Leidos faces competition from larger defense contractors such as Lockheed Martin and Boeing. This competition could pressure Leidos's margins and make it difficult to maintain its market share.
• Sustainability concerns: Leidos's business model is closely tied to the defense industry, which has been criticized for its environmental impact and ethical practices. Investors who are concerned about sustainability may be reluctant to invest in Leidos.

In addition to these general cons, there are also some specific risks that investors should be aware of before investing in Leidos:

• The company's backlog of government contracts is declining: Leidos's backlog of government contracts declined by 12% in the first quarter of 2023. This could indicate that the company is losing market share or that government agencies are becoming more cautious about awarding contracts.
• The company's earnings growth has been slowing: Leidos's earnings per share growth has slowed from an average of 15% per year in the five years leading up to 2023 to an average of 5% per year in the past two years. This could be a sign that the company is facing increasing competition or that its cost structure is becoming more difficult to manage.
• The company's stock price has been volatile: Leidos's stock price has been volatile in recent years, with swings of 20% or more in a single month. This could make it difficult for investors to time their entry and exit points.

Overall, Leidos is a large and well-established company with a strong track record of profitability. However, investors should be aware of the potential risks associated with investing in the defense industry before making a decision.

Wrapping Things Up

So that's the end of my post covering Jovine's latest pitch.

In the end, it's up to you whether or not to invest in this company.

Jovine gave you the best outlook for this company, and I gave you a breakdown of the stock as well.

Are you thinking about investing in Leidos?

Let me know below!