Leidos Holdings (LDOS) AI Stock Analysis

• Market Cap: $24.09B
• Dividend Yield: 0.87%
• Average Volume (3M): 749.31K
• Price to Earnings (P/E): 17.7
• Beta (1Y): 0.75
• Revenue Growth: 6.48%
• EPS Growth: 22.17%
• Country: US
• Employees: 47,000
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 3.05
• Shares Outstanding: 127,855,170
• 10 Day Avg. Volume: 778,772
• 30 Day Avg. Volume: 749,311
• PEG Ratio: 0.03
• Price to Book (P/B): 4.47
• Price to Sales (P/S): 1.18
• P/FCF Ratio: 15.86
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: 1.62
• Enterprise Value/Gross Profit: 9.19
• Enterprise Value/Ebitda: 11.93
• 1Y Price Target: $216.00
• Price Target Upside: 14.63% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 79 Outperform
• Price Target: $219.00 ▲(16.22% Upside)

The score is driven primarily by strong underlying financial performance and a notably positive earnings update with raised 2025 guidance and robust cash generation. Valuation is reasonable but not cheap given the low dividend yield, while technical signals are neutral-to-mildly positive. The ENTRUST acquisition adds growth upside, partially offset by added financing and execution risk and by the recent decline in free cash flow growth.

Positive Factors

Profitability & margins

Sustained mid-teens gross margins and positive net margins reflect scale and pricing power in mission-critical government and commercial services. Durable margins stem from long-term contracts, high-value systems integration and recurring services, supporting stable earnings over months.

Operating cash generation & raised guidance

Robust operating cash flow and reiterated/upward guidance demonstrate persistent cash conversion and execution discipline. Strong OCF funds capex, debt paydown and buybacks, enhancing financial flexibility and supporting durable investment in growth initiatives over the next several quarters.

Strategic expansion into energy infrastructure

The ENTRUST acquisition materially expands utility engineering capabilities and client base into transmission, distribution and generation. Exposure to a large, multi-decade grid modernization TAM (~$1T) increases secular revenue runway and diversifies Leidos beyond defense and IT services.

Negative Factors

Acquisition financing and leverage risk

Financing a $2.4B all-cash acquisition with new debt and a large bridge facility raises execution and leverage risk. Higher debt servicing needs can constrain flexibility, elevate interest expense and limit optionality for M&A or buybacks until leverage is meaningfully reduced.

Declining free cash flow growth

A TTM decline in free cash flow growth weakens the company’s internal funding capacity for reinvestment and de-leveraging. Even with strong operating cash, negative FCF trends reduce cushion for cyclical contract delays and increase reliance on external financing for strategic moves.

Government contract timing and legal reserve risk

Heavy dependence on federal contracting creates timing and adjudication risk during shutdowns, delaying revenue and cash receipts. Rising legal reserves signal contingent liabilities; together they can produce quarter-to-quarter volatility in revenue recognition and margin sustainability over the medium term.

Leidos Holdings Business Overview & Revenue Model

Company Description

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. It operates through three segments: Defense Solutions, Civil, and Health. 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 National Aeronautics and Space Administration, military services, and government agencies of U.S. allies abroad, as well as other federal and commercial customers in the national security industry. Its 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 and automation 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 worldwide, including health information management, managed health, digital transformation, and life sciences research and development services. Leidos Holdings, Inc. was founded in 1969 and is headquartered in Reston, Virginia.

How the Company Makes Money

Leidos generates revenue primarily through government contracts, particularly in defense and intelligence sectors, where it provides a range of services including systems engineering, software development, and data analytics. The company also engages in commercial contracts, offering solutions in cybersecurity and healthcare. Key revenue streams include long-term contracts with federal, state, and local government agencies, as well as partnerships with major defense contractors and commercial entities. Significant factors contributing to its earnings include a robust backlog of contracts, the expansion of its services in emerging technology areas, and strategic acquisitions that enhance its capabilities and market reach.

Leidos Holdings Financial Statement Overview

Summary

Strong profitability and operating efficiency (TTM gross margin 17.61%, net margin 8.11%) alongside consistent revenue growth support a solid score. Leverage appears manageable (D/E 1.07) and ROE is strong (30.81%), but the decline in TTM free cash flow growth is a notable risk that tempers the rating.

Income Statement

Leidos Holdings demonstrates strong revenue growth with a TTM increase of 1.64% and consistent annual growth. The company maintains healthy gross and net profit margins, with the TTM gross profit margin at 17.61% and net profit margin at 8.11%. EBIT and EBITDA margins are robust, indicating efficient operations. Overall, the income statement reflects a solid financial performance with a positive growth trajectory.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio of 1.07 in the TTM, indicating manageable leverage. Return on equity is strong at 30.81%, reflecting effective use of equity to generate profits. The equity ratio is stable, suggesting a balanced capital structure. However, the company should monitor its debt levels to maintain financial stability.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth in the TTM, but operating cash flow remains strong with a coverage ratio of 0.52. The free cash flow to net income ratio is high at 0.89, indicating efficient cash generation relative to net income. While cash flow management is generally sound, the negative growth in free cash flow warrants attention.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	17.33B	16.66B	15.44B	14.40B	13.74B	12.30B
Gross Profit	3.05B	2.80B	2.24B	2.08B	2.01B	1.74B
EBITDA	2.35B	2.12B	946.00M	1.42B	1.48B	1.25B
Net Income	1.41B	1.25B	199.00M	685.00M	753.00M	628.00M
Balance Sheet
Total Assets	13.54B	13.10B	12.70B	13.07B	13.26B	12.51B
Cash, Cash Equivalents and Short-Term Investments	974.00M	943.00M	777.00M	516.00M	727.00M	524.00M
Total Debt	5.23B	5.29B	5.20B	5.49B	5.67B	5.31B
Total Liabilities	8.59B	8.64B	8.44B	8.72B	8.92B	8.64B
Stockholders Equity	4.91B	4.41B	4.20B	4.30B	4.29B	3.86B
Cash Flow
Free Cash Flow	1.39B	1.24B	958.00M	857.00M	927.00M	1.15B
Operating Cash Flow	1.55B	1.39B	1.17B	986.00M	1.03B	1.33B
Investing Cash Flow	-458.00M	-142.00M	-211.00M	-313.00M	-730.00M	-2.81B
Financing Cash Flow	-1.23B	-1.08B	-715.00M	-865.00M	-113.00M	1.45B

Leidos Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 188.44
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LDOS, the sentiment is Negative. The current price of 188.44 is below the 20-day moving average (MA) of 191.72, below the 50-day MA of 188.85, and above the 200-day MA of 174.62, indicating a neutral trend. The MACD of -0.38 indicates Positive momentum. The RSI at 47.10 is Neutral, neither overbought nor oversold. The STOCH value of 33.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LDOS.

Leidos Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INFY	80 Outperform	$70.51B	22.32	32.85%	2.58%	4.62%	1.06%
LDOS	79 Outperform	$24.09B	17.70	29.51%	0.87%	6.48%	22.17%
CACI	74 Outperform	$13.36B	25.90	13.18%	―	12.61%	11.85%
CTSH	71 Outperform	$37.02B	16.34	15.16%	1.46%	7.44%	-4.57%
SAIC	71 Outperform	$4.42B	12.38	23.75%	1.69%	-0.38%	31.38%
WIT	67 Neutral	$27.02B	17.59	15.82%	2.78%	-1.97%	48.61%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Leidos Holdings Corporate Events

Leidos to Acquire ENTRUST, Expanding Energy Infrastructure Footprint

On Jan. 23, 2026, Leidos’ subsidiary Leidos, Inc. agreed to acquire ENTRUST Solutions Group (KENE Parent, Inc.) from KENE Holdings for an all-cash consideration of approximately $2.4 billion, with closing expected by the end of the second quarter of 2026 subject to customary regulatory and antitrust approvals and other closing conditions. The deal will effectively double Leidos’ energy infrastructure engineering business, expand its presence from transmission and distribution into utility gas and electric generation infrastructure markets, and broaden its base of utility clients at a time when U.S. utilities are projected to invest $1 trillion over the next decade in grid modernization; Leidos expects the transaction to be immediately accretive to revenue growth and adjusted EBITDA margin, and to fund it through a mix of new debt, cash on hand, commercial paper and a committed $1.4 billion 364-day bridge credit facility from Citi, signaling a strategic push to solidify the company’s position as a leading engineering solutions provider to the utility sector.

The most recent analyst rating on (LDOS) stock is a Hold with a $190.00 price target. To see the full list of analyst forecasts on Leidos Holdings stock, see the LDOS Stock Forecast page.