Leidos (NYSE:LDOS) Releases Quarterly Earnings Results, Beats Estimates By $0.58 EPS

Leidos (NYSE:LDOS) posted its quarterly 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 return on equity of 31.48% and a net margin of 7.97%. The company had revenue of $4.63 billion during the quarter, compared to analysts’ expectations of $4.71 billion. During the same quarter in the previous year, the firm earned $3.05 EPS. Leidos’s 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 Stock Up 1.9%

Shares of LDOS stock traded up $2.57 on Thursday, hitting $138.25. The stock had a trading volume of 170,916 shares, compared to its average volume of 1,294,320. The company has a debt-to-equity ratio of 1.15, a current ratio of 1.60 and a quick ratio of 1.60. The stock has a market cap of $17.35 billion, a price-to-earnings ratio of 12.37, a price-to-earnings-growth ratio of 1.48 and a beta of 0.55. Leidos has a 12-month low of $98.86 and a 12-month high of $205.00. The business has a 50 day moving average of $129.31 and a 200 day moving average of $140.77.

Leidos Increases Dividend

The company also recently announced a quarterly dividend, which will be paid on Thursday, December 31st. Stockholders of record on Tuesday, December 15th will be paid a $0.45 dividend. This represents a $1.80 annualized dividend and a dividend yield of 1.3%. The ex-dividend date is Tuesday, December 15th. This is a positive change from Leidos’s previous quarterly dividend of $0.43. Leidos’s dividend payout ratio (DPR) is currently 16.04%.

Wall Street Analyst Weigh In

A number of research analysts have recently commented on the stock. TD Cowen dropped their target price on shares of Leidos from $135.00 to $130.00 and set a “hold” rating for the company in a report on Tuesday, October 6th. Jefferies Financial Group decreased their price target on shares of Leidos from $145.00 to $130.00 and set a “hold” rating on the stock in a report on Tuesday, October 6th. BNP Paribas Exane upped their price objective on shares of Leidos from $165.00 to $175.00 and gave the stock an “outperform” rating in a research report on Wednesday, August 5th. The Goldman Sachs Group cut their target price on shares of Leidos from $152.00 to $132.00 and set a “neutral” rating on the stock in a research report on Wednesday, August 12th. Finally, Citigroup reduced their price objective on Leidos from $161.00 to $141.00 and set a “buy” rating on the stock in a research report on Wednesday, October 7th. One equities 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 data from MarketBeat.com, the stock presently has an average rating of “Hold” and an average price target of $151.50.

Insider Buying and Selling at Leidos

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

Leidos announced that its board has initiated a stock buyback program on Friday, July 31st that permits the company to repurchase 20,000,000 outstanding shares. This repurchase authorization permits the aerospace company to reacquire shares of its stock through open market purchases. Stock repurchase programs are usually an indication that the company’s board believes its shares are undervalued.

Leidos Company Profile

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.