Leidos (NYSE:LDOS) Announces Earnings Results

Leidos (NYSE:LDOS) posted its earnings results on Tuesday. The aerospace company reported $3.62 EPS for the quarter, topping the consensus estimate of $3.04 by $0.58, Zacks reports. Leidos had a net margin of 7.97% and a return on equity of 31.48%. The firm had revenue of $4.63 billion during the quarter, compared to analysts’ expectations of $4.71 billion. During the same quarter in the prior year, the firm earned $3.05 EPS. Leidos’s quarterly revenue was up 3.6% on a year-over-year basis.

Here are the key takeaways from Leidos’ conference call:

• Strong third-quarter execution: Revenue rose 4% to $4.63 billion, adjusted EBITDA margin improved to 13.9%, non-GAAP EPS increased 19% to $3.62, and free cash flow reached $476 million. Year-to-date free cash flow of $1.5 billion has already surpassed the company’s original full-year target.
• Bookings and backlog strengthened: Net awards totaled $5.5 billion, producing a 1.2x book-to-bill ratio, while defense posted a 1.9x quarterly and 2.0x year-to-date book-to-bill. Total backlog reached $49.6 billion and funded backlog rose 22% year over year to $11.1 billion.
• Defense technology and energy remain key growth engines. Leidos cited more than a dozen defense programs moving from development into production, including IFPC, munitions, hypersonics, and space sensing, while its energy pipeline expanded significantly and management maintained expectations for double-digit energy growth and mid-to-high-teens margins.
• The VBA disability-exam recompete remains a major uncertainty. Although management believes the draft RFP favors Leidos’ incumbent position and expects current contracts to continue through the first half of 2027, executives said 2027 is unlikely to be a bottom-line growth year as the business adjusts to the new contract structure.
• Leidos raised or narrowed elements of its 2026 outlook after selling its Security Enterprise Solutions business, while maintaining adjusted EBITDA expectations in the mid-13% range. The company also warned that procurement delays, unfavorable decisions, cost-plus revenue pressure, and the VBA transition could temper growth momentum in the fourth quarter and into 2027.

Leidos Price Performance

Shares of NYSE:LDOS opened at $132.89 on Friday. The stock has a market cap of $16.21 billion, a price-to-earnings ratio of 11.89, a PEG ratio of 1.45 and a beta of 0.55. The company has a debt-to-equity ratio of 1.15, a current ratio of 1.60 and a quick ratio of 1.60. Leidos has a 12 month low of $98.86 and a 12 month high of $205.00. The stock’s 50 day moving average price is $129.14 and its 200 day moving average price is $140.19.

Leidos Increases Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Thursday, December 31st. Investors of record on Tuesday, December 15th will be paid a dividend of $0.45 per share. This is a boost from Leidos’s previous quarterly dividend of $0.43. This represents a $1.80 dividend on an annualized basis and a dividend yield of 1.4%. The ex-dividend date is Tuesday, December 15th. Leidos’s dividend payout ratio (DPR) is 15.38%.

Insiders Place Their Bets

In other news, Director Noel B. Geer sold 10,000 shares of the business’s stock in a transaction on Tuesday, August 11th. The stock was sold at an average price of $140.66, for a total value of $1,406,600.00. Following the sale, the director owned 34,274 shares of the company’s stock, valued at approximately $4,820,980.84. The trade was a 22.59% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. Also, Director Gary May sold 1,000 shares of the company’s stock in a transaction on Tuesday, September 1st. The shares were sold at an average price of $140.85, for a total value of $140,850.00. Following the completion of the sale, the director owned 10,204 shares of the company’s stock, valued at approximately $1,437,233.40. This trade represents a 8.93% decrease in their position. The SEC filing for this sale provides additional information. Company insiders own 0.77% of the company’s stock.

Wall Street Analyst Weigh In

A number of equities research analysts have recently weighed in on the company. Citigroup cut their price target on Leidos from $161.00 to $141.00 and set a “buy” rating on the stock in a report on Wednesday, October 7th. Guggenheim reiterated a “buy” rating and set a $160.00 price objective on shares of Leidos in a research report on Wednesday. The Goldman Sachs Group decreased their price objective on Leidos from $152.00 to $132.00 and set a “neutral” rating for the company in a report on Wednesday, August 12th. Bank of America raised their target price on Leidos from $125.00 to $135.00 and gave the company a “neutral” rating in a research report on Friday, September 18th. Finally, JPMorgan Chase & Co. downgraded Leidos from an “overweight” rating to a “neutral” rating and cut their target price for the company from $160.00 to $142.00 in a research note on Thursday, October 8th. One research analyst has rated the stock with a Strong Buy rating, five have assigned a Buy rating and ten have given a Hold rating to the stock. According to MarketBeat, Leidos presently has an average rating of “Hold” and a consensus target price of $151.50.

Leidos announced that its Board of Directors has approved a stock buyback program on Friday, July 31st that permits the company to buy back 20,000,000 outstanding shares. This buyback authorization permits the aerospace company to reacquire shares of its stock through open market purchases. Share buyback programs are usually a sign that the company’s leadership believes its stock is undervalued.

About Leidos

Leidos Holdings, Inc is a technology and engineering company that provides services and solutions to government and commercial customers. Its work spans defense, intelligence, civil government and health, with offerings in areas such as information technology, cybersecurity, data analytics, engineering and mission software.

The company also develops and integrates systems and equipment for complex missions, including defense and aviation applications, and provides technology and services to support government health programs and healthcare organizations.

Leidos traces its history to Science Applications International Corporation, founded in 1969.