Leidos (NYSE:LDOS) vs. KBR (NYSE:KBR) Critical Analysis

KBR (NYSE:KBR) and Leidos (NYSE:LDOS) are both industrials companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitability and analyst recommendations.

Insider and Institutional Ownership

97.0% of KBR shares are held by institutional investors. Comparatively, 76.1% of Leidos shares are held by institutional investors. 1.1% of KBR shares are held by insiders. Comparatively, 0.8% of Leidos shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for KBR and Leidos, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KBR	0	5	3	0	2.38
Leidos	0	10	6	1	2.47

KBR presently has a consensus target price of $45.00, indicating a potential upside of 30.04%. Leidos has a consensus target price of $158.86, indicating a potential upside of 36.08%. Given Leidos’ stronger consensus rating and higher probable upside, analysts plainly believe Leidos is more favorable than KBR.

Profitability

This table compares KBR and Leidos’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KBR	5.49%	32.55%	7.62%
Leidos	7.80%	30.81%	10.78%

Volatility & Risk

KBR has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500. Comparatively, Leidos has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500.

Earnings & Valuation

This table compares KBR and Leidos”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KBR	$7.79 billion	0.56	$415.00 million	$3.32	10.42
Leidos	$17.17 billion	0.85	$1.45 billion	$10.72	10.89

Leidos has higher revenue and earnings than KBR. KBR is trading at a lower price-to-earnings ratio than Leidos, indicating that it is currently the more affordable of the two stocks.

Dividends

KBR pays an annual dividend of $0.66 per share and has a dividend yield of 1.9%. Leidos pays an annual dividend of $1.72 per share and has a dividend yield of 1.5%. KBR pays out 19.9% of its earnings in the form of a dividend. Leidos pays out 16.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. KBR has raised its dividend for 6 consecutive years and Leidos has raised its dividend for 6 consecutive years.

Summary

Leidos beats KBR on 13 of the 17 factors compared between the two stocks.

About KBR

KBR, Inc. provides scientific, technology, and engineering solutions to governments and commercial customers worldwide. It operates through Government Solutions and Sustainable Technology Solutions segments. The Government Solutions segment offers life-cycle support solutions to defense, intelligence, space, aviation, and other programs and missions for military and other government agencies in the United States, the United Kingdom, and Australia. Its services cover research and development, advanced prototyping, acquisition support, systems engineering, cyber analytics, space domain awareness, test and evaluation, systems integration and program management, global supply chain management, and operations readiness and support, as well as command, control, communications, computers, intelligence, surveillance, and reconnaissance services. This segment also provides various professional advisory services to the defense, renewable energy, and critical infrastructure sectors. The Sustainable Technology Solutions segment operates portfolio of various proprietary process technologies for ammonia/syngas, chemical/petrochemicals, clean refining, and circular process/circular economy solutions. This segment also provides synergistic services, including advisory and consulting focused on broad-based energy transition and net-zero carbon emission solutions; high-end engineering, design and program management centered around decarbonization, energy efficiency, environmental impact and asset optimization; and digitally-enabled operating and monitoring solutions. KBR, Inc. was founded in 1901 and is headquartered in Houston, Texas.

About Leidos

Leidos Holdings, Inc., together with its subsidiaries, provides services and solutions in the defense, intelligence, civil, and health markets in the United States and internationally. The company operates through Defense Solutions, Civil, and Health segments. The Defense Solutions segment offers national security solutions and systems for air, land, sea, space, and cyberspace for the U.S. Intelligence Community, the Department of Defense, the space development agency, the National Aeronautics and Space Administration, defense information systems agency, military services, and government agencies of U.S. allies abroad, as well as other federal and commercial customers in the national security industry. The solutions include technology, large-scale systems, command and control platforms, data analytics, logistics, and cybersecurity solutions, as well as intelligence analysis and operations support services to critical missions. The Civil segment provides systems integration services to air navigation service providers, including the federal aviation administration, the En route automation modernization, advanced technology oceanic procedure, time based flow management, terminal flight data management, geo-7, and future flight services, as well as enterprise-information display systems; and security detection services. It also offers information technology (IT) solutions in cloud computing, mobility, application modernization, DevOps, data center, network modernization, asset management, help desk operations, and digital workplace enablement; and environment, energy, and infrastructure services. The Health segment offers solutions to federal and commercial customers responsible for health and well-being of people, include health information management, managed health, digital modernization, and life sciences research and development services. Leidos Holdings, Inc. was founded in 1969 and is headquartered in Reston, Virginia.