Leidos (NYSE:LDOS) versus LZ Technology (NASDAQ:LZMH) Critical Review

LZ Technology (NASDAQ:LZMH) and Leidos (NYSE:LDOS) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, risk, earnings, valuation, institutional ownership and dividends.

Insider and Institutional Ownership

76.1% of Leidos shares are owned by institutional investors. 0.7% of Leidos shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares LZ Technology and Leidos”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LZ Technology	N/A	N/A	N/A	N/A	N/A
Leidos	$16.66 billion	1.47	$1.25 billion	$10.72	17.82

Leidos has higher revenue and earnings than LZ Technology.

Analyst Recommendations

This is a summary of current recommendations and price targets for LZ Technology and Leidos, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LZ Technology	1	0	0	0	1.00
Leidos	0	5	9	0	2.64

Leidos has a consensus price target of $213.09, indicating a potential upside of 11.53%. Given Leidos’ stronger consensus rating and higher possible upside, analysts clearly believe Leidos is more favorable than LZ Technology.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
LZ Technology	N/A	N/A	N/A
Leidos	8.11%	33.02%	11.40%

Summary

Leidos beats LZ Technology on 9 of the 9 factors compared between the two stocks.

About LZ Technology

As a holding company with no material operations of its own, LZ Technology conducts its operations through its operating entities formed in the PRC, primarily Lianzhang Portal and its subsidiaries. For the years ended December 31, 2022 and 2023, the Company had a total of 247 and 255 customers, respectively, who entered into contracts with the Company to purchase the Company’s products and services. For the six months ended June 30, 2024 and 2023, the Company had a total of 168 and 102 customers, respectively, who entered into contracts with the Company to purchase the Company’s products and services. The Company, however, has derived a large portion of its revenues from a few customers. For the years ended December 31, 2022 and 2023, the Company’s top three customers collectively accounted for approximately 84.4% and 24.5% of its total revenue, respectively. For the six months ended June 30, 2024, the Company’s top three customers collectively accounted for approximately 33.2% of its total revenue. The Company is an information technology and advertising company. Its operations are organized primarily into three business verticals: (i) Smart Community, (ii) Out-of-Home Advertising, and (iii) Local Life. Smart Community. The Company provides intelligent community building access and safety management systems through access control monitors and vendor-provided SaaS platforms. The Company’s intelligent community access control system makes resident access to properties simpler. As of June 30, 2024, approximately 72,773 of the Company’s access control screens had been installed in over 4,000 residential communities, serving over 2.7 million households. Out-of-Home Advertising. The Company offers clients one-stop multi-channel advertising solutions. Capitalizing on the Company’s network of monitors that span approximately 120 cities in China such as Shanghai, Beijing, Guangzhou, Shenzhen, Nanjing, Xiamen, Hefei, Dalian, Ningbo, Chengdu, Hangzhou, Wuhan, Chongqing, Changsha, the Company’s Out-of-Home Advertising services help merchants display advertisements in a variety of formats across its intelligent access control and safety management system. Advertisements are placed on the monitors and within the SaaS software. Residents are exposed to these advertisements each time they enter and exit community buildings or open the SaaS software. This level of visibility serves as a highly effective means of advertising, assisting merchants in effectively promoting their brands and accelerating their product sales. Moreover, the Company partners with other outdoor advertising providers to maximize coverage by placing the advertisements on the partners’ numerous displays in public transportation, hotels and other settings as well as deploying posters at events. This broad approach provides clients with a truly comprehensive out-of-home advertising solution. Local Life. The Company connects local businesses with consumers via online promotions and transactions. With its strong technological capabilities, the Company helps local restaurants, hotels, tourist companies, retail stores, cinemas and other merchants offer deals and coupons to consumers on social media platforms such as WeChat, Douyin (the Chinese version of TikTok) and RedNote. The Local Life vertical bridges the businesses’ need for product sales and promotions and the consumers’ need for dining, shopping, entertainment, tourist attractions and other local services. In addition, deals from local businesses can also be displayed on the access control screens. In this way, clients of the Company’s Local Life services can also reach the Smart Community residents, leveraging the Company’s access control screens’ extensive coverage and high exposure potential. Since early 2023, we have embarked on executing the strategy of deepening engagement with merchants and manufacturers within our Local Life space through facilitating retail sales of diversified goods and services, including beverages, groceries and travel packages. The Company reports financial results in one segment. Currently, a substantial portion of the Company’s revenues are generated from advertising and promotional activities, namely by the Out-of-Home Advertising and Local Life verticals. Revenues from Smart Community, which mainly consist of product sales of access control devices and service fees, contribute only a small portion to the Company’s total revenues. Thus, the Smart Community revenues are grouped with other miscellaneous revenue sources, such as advertising design and production and social media account operations. Our principal executive offices are located at Unit 311, Floor 3, No. 5999 Wuxing Avenue, Zhili Town, Wuxing District, Huzhou City, Zhejiang province, People’s Republic of China 313000. LZ Technology’s registered office is currently located at the office of Sertus Incorporations (Cayman) Limited, Sertus Chambers, Governors Square, Suite # 5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman Islands, which may be changed from time to time at the discretion of directors. LZ Technology’s agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY.

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.