Leidos (NYSE:LDOS) Issues Quarterly Earnings Results, Beats Expectations By $0.58 EPS

Leidos (NYSE:LDOS) issued its earnings results on Tuesday. The aerospace company reported $3.62 EPS for the quarter, topping analysts’ consensus estimates of $3.04 by $0.58, Zacks reports. Leidos had a net margin of 7.80% and a return on equity of 30.81%. The company had revenue of $4.63 billion for the quarter, compared to the consensus estimate of $4.71 billion. During the same period in the previous year, the firm earned $3.05 earnings per share. Leidos’s quarterly revenue was up 3.6% compared to the same quarter last year.

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 Stock Performance

Shares of Leidos stock opened at $132.89 on Friday. The firm has a fifty day moving average of $129.14 and a two-hundred day moving average of $140.19. Leidos has a 52 week low of $98.86 and a 52 week high of $205.00. The company has a debt-to-equity ratio of 1.13, a quick ratio of 1.60 and a current ratio of 1.63. The stock has a market capitalization of $16.68 billion, a price-to-earnings ratio of 11.82, a PEG ratio of 1.60 and a beta of 0.55.

Leidos Increases Dividend

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

Wall Street Analyst Weigh In

Several brokerages have recently commented on LDOS. Citigroup reduced their target price on Leidos from $161.00 to $141.00 and set a “buy” rating for the company in a report on Wednesday, October 7th. The Goldman Sachs Group cut their target price on Leidos from $152.00 to $132.00 and set a “neutral” rating for the company in a research note on Wednesday, August 12th. Wells Fargo & Company set a $165.00 price objective on Leidos in a research note on Monday, August 17th. Jefferies Financial Group reduced their price target on shares of Leidos from $145.00 to $130.00 and set a “hold” rating on the stock in a research report on Tuesday, October 6th. Finally, TD Cowen reduced their price objective on Leidos from $135.00 to $130.00 and set a “hold” rating for the company in a research note on Tuesday, October 6th. One analyst has rated the stock with a Strong Buy rating, five have issued a Buy rating and ten have assigned a Hold rating to the stock. Based on data from MarketBeat.com, the stock presently has a consensus rating of “Hold” and an average price target of $151.50.

Insider Buying and Selling at Leidos

In other news, Director Gary May sold 1,000 shares of the stock in a transaction that occurred 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 transaction, the director owned 10,204 shares in the company, valued at $1,437,233.40. This represents a 8.93% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, Director Noel B. Geer sold 10,000 shares of the firm’s stock in a transaction that occurred 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 directly owned 34,274 shares of the company’s stock, valued at $4,820,980.84. This represents a 22.59% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders own 0.77% of the company’s stock.

Leidos announced that its board has authorized a share buyback plan on Friday, July 31st that allows the company to repurchase 20,000,000 shares. This buyback authorization allows the aerospace company to repurchase shares of its stock through open market purchases. Share buyback plans are usually an indication that the company’s board believes its stock is undervalued.

About Leidos

Leidos Holdings, Inc (NYSE: LDOS) is a technology, engineering and science company that provides services and solutions to government and commercial customers. Its work supports defense, intelligence, civil government, health and transportation missions, with offerings that include information technology modernization, systems integration, cybersecurity, data analytics, artificial intelligence, engineering and mission operations.

The company also provides health technology and scientific services, transportation management systems, aviation and security solutions, and support for complex government programs.