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What this page is: Delvantic's full research page for Leidos Holdings Inc. (LDOS) — AI-driven forensic equity research: mechanical valuation models (DCF, EPV, anchored-PE, scenario) plus three independent AI lenses (Quality / Value / Sentiment). Everything below is rendered server-side; you are not missing content that requires JavaScript. All scores are predictions and research opinions, not financial advice.
Our current read (analysis of 2026-10-07): Designation Watch · Gem Score +32 (−100…+100 Quality+Value blend) · Quality 61 · Value 13 · Sentiment -10 (timing only, not weighted) · Composite fair value $204.37 vs $140.66 at analysis
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Leidos Holdings Inc.
LDOS NYSELeidos Holdings Inc. is a global science and technology company that provides technology and engineering services and solutions primarily to government and commercial clients. The company focuses on mission-critical work across the defense, intelligence, civil, and health markets, supporting areas such as national security, cybersecurity, digital modernization, and complex systems integration. Leidos Holdings Inc. organizes its operations into segments that address national security, information systems and global solutions, and health and infrastructure, delivering advanced analytics, software, secure networks, and engineering services to agencies and enterprises. Its offerings span from IT modernization and cloud services to surveillance, logistics, and healthcare technology solutions. Headquartered in Reston, Virginia and founded in 1969, Leidos Holdings Inc. plays a significant role as a contractor and technology partner to the United States federal government, state and local agencies, foreign governments, and selected commercial organizations worldwide, with a strong emphasis on integrating and protecting physical, digital, and data domains.
Price Overview
Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 11.14
Total Equity: $4.96B
Shares: 130,000,000
Total Debt: $20.00M
Cash: $1.11B
EBITDA: $2.40B
Total Debt: $20.00M
Cash: $1.11B
Revenue: $17.17B
Revenue: $17.17B
Revenue: $17.17B
Total Equity: $4.96B
Tax Rate: 23.4%
Equity: $4.96B
Total Debt: $20.00M
Cash: $1.11B
Current Liabilities: $2.83B
Long-Term Debt: $0.00
Total Debt: $20.00M
Total Equity: $4.96B
Shares: 130,000,000
Shares: 130,000,000
CapEx: -$125.00M
Shares: 130,000,000
Stock Price: $140.38
Net Income: $1.45B
Industry Benchmarks
Income Statement (Annual)
Last updated: Aug 13, 2026 12:49am (55d ago)| Metric | 2021 | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|---|
| Revenue | $13.7B | $14.4B | $15.4B | $16.7B | $17.2B |
| Cost of Revenue | $11.7B | $12.3B | $13.2B | $13.9B | $14.1B |
| Gross Profit | $2.0B | $2.1B | $2.2B | $2.8B | $3.1B |
| Operating Expenses | $862.0M | $996.0M | $1.6B | $971.0M | $990.0M |
| Operating Income | $1.2B | $1.1B | $621.0M | $1.8B | $2.1B |
| Net Income | $753.0M | $685.0M | $199.0M | $1.3B | $1.4B |
| EBITDA | $1.5B | $1.4B | $952.0M | $2.1B | $2.4B |
| EPS | $5.34 | $5.00 | $1.45 | $9.36 | $11.31 |
| EPS (Diluted) | $5.27 | $4.96 | $1.44 | $9.22 | $11.14 |
Balance Sheet (Annual)
Last updated: Aug 3, 2026 12:30pm (65d ago)| Metric | 2021 | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|---|
| Cash & Equivalents | $727.0M | $516.0M | $777.0M | $849.0M | $1.1B |
| Total Current Assets | $3.6B | $3.6B | $4.0B | $4.3B | $4.8B |
| Total Assets | $13.3B | $13.1B | $12.7B | $13.0B | $13.5B |
| Current Liabilities | $3.2B | $3.9B | $3.0B | $3.6B | $2.8B |
| Long-Term Debt | — | — | — | — | — |
| Total Liabilities | $8.9B | $8.7B | $8.4B | $8.6B | $8.5B |
| Total Equity | $4.3B | $4.4B | $4.3B | $4.5B | $5.0B |
| Retained Earnings | $1.9B | $2.4B | $2.4B | $3.4B | $4.6B |
Cash Flow (Annual)
Last updated: Aug 13, 2026 12:49am (55d ago)| Metric | 2021 | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|---|
| Operating Cash Flow | $1.0B | $986.0M | $1.2B | $1.4B | $1.8B |
| Capital Expenditure | -$104.0M | -$129.0M | -$207.0M | -$149.0M | -$125.0M |
| Free Cash Flow | $927.0M | $857.0M | $958.0M | $1.3B | $1.6B |
| Acquisitions (net) | -$622.0M | -$192.0M | -$6.0M | $0 | -$293.0M |
| Net Debt Issued / (Repaid) | $274.0M | -$165.0M | -$302.0M | -$18.0M | -$22.0M |
| Dividends Paid | — | — | — | — | — |
| Stock Buybacks | -$237.0M | $0 | -$225.0M | -$850.0M | -$400.0M |
| Net Change in Cash | $188.0M | -$192.0M | $245.0M | $199.0M | $213.0M |
Growth Trends (YoY %)
Last updated: Aug 13, 2026 12:49am (55d ago)| Metric | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|
| Revenue Growth | +4.8% | +7.2% | +7.9% | +3.1% |
| Gross Profit Growth | +3.5% | +7.7% | +24.7% | +10.8% |
| Operating Income Growth | -5.6% | -42.9% | +194.2% | +15.4% |
| Net Income Growth | -9.0% | -70.9% | +530.2% | +15.5% |
| EBITDA Growth | -3.8% | -33.0% | +122.4% | +13.3% |
Dividend History (Last 20)
Last updated: Aug 13, 2026 12:14am (55d ago)| Date | Dividend | Declaration | Record | Payment |
|---|---|---|---|---|
| 2026-06-15 | $0.43 | — | — | — |
| 2026-03-16 | $0.43 | — | — | — |
| 2025-12-15 | $0.43 | — | — | — |
| 2025-09-15 | $0.40 | — | — | — |
| 2025-06-16 | $0.40 | — | — | — |
| 2025-03-14 | $0.40 | — | — | — |
| 2024-12-16 | $0.40 | — | — | — |
| 2024-09-13 | $0.38 | — | — | — |
| 2024-06-14 | $0.38 | — | — | — |
| 2024-03-14 | $0.38 | — | — | — |
| 2023-12-14 | $0.38 | — | — | — |
| 2023-09-14 | $0.36 | — | — | — |
| 2023-06-14 | $0.36 | — | — | — |
| 2023-03-14 | $0.36 | — | — | — |
| 2022-12-14 | $0.36 | — | — | — |
| 2022-09-14 | $0.36 | — | — | — |
| 2022-06-14 | $0.36 | — | — | — |
| 2022-03-14 | $0.36 | — | — | — |
| 2021-12-14 | $0.36 | — | — | — |
| 2021-09-14 | $0.36 | — | — | — |
Deep Analysis
Risk : Reward — upside vs downside from this company's own quarters
Computed 2026-10-06 02:02A +1σ run of quarters pays +33%; a −1σ run costs 21%. Ratio 1.6:1 (μ 4.9%, σ 4.3% floored by sector, 16 pairs).
Older method (repeat-worst-quarter): 12.8 : 1
| Case | Growth | Margin | Fair value | vs price ($140.66) |
|---|---|---|---|---|
| Bull — recovery | +10% | 17.3% | $376.05 | +167% |
| Base — stabilizes | +7% | 15.0% | $293.72 | +109% |
| Bear — keeps slipping | +3% | 12.8% | $224.37 | +60% |
| Stress — last quarter repeats | -4% | 8.6% | $122.20 | -13% |
| Upside — a +1σ run of quarters (v2) | +9% | 8.6% | $186.83 | +33% |
| Stress — a −1σ run of quarters (v2) | +1% | 6.6% | $111.62 | -21% |
Narrative Economics
market-narrative step).
Growth Outlook
Analyzed 2026-08-31 00:39The question every valuation on this page silently assumes: is this company likely to grow? Judged forward — the business, its category, the world — against what's already printed.
Claude Reading
Looking at the raw numbers first: LDOS is doing $17.2B TTM revenue growing ~3% YoY, with net margins that have bounced between 6.5% and 9.2% over the last eight quarters — the most recent print at 7.8% is right in the middle of that band, not a peak. FCF of $1.63B against a $17.65B market cap is a 9.2% FCF yield, and $1.75B OCF on $125M capex reveals a genuinely asset-light services model. Debt/equity of 0.94x with $4.65B gross debt is manageable at 2.7x EBITDA-ish given operating income of $2.11B. ROIC of 19% and ROE of 29% on a 12.6x P/E is the kind of setup that usually gets bought, not sold. The 2023 anomaly (op income collapsing to $621M, NI to $199M) was the goodwill impairment/restructuring cycle — the trajectory since is a clean recovery, not a bubble.
Where I part company with the Market Forces and Thesis Evaluation models: both lean heavily on "margin peak unsustainable" and "insiders cashing out." The margin data doesn't support the peak thesis — Q1'26 was 7.5%, Q2'26 was 7.8%, and the Q2'25 9.2% print looks like the outlier, not the norm. Full-year FY26 net margin is 8.4%, up from 7.5% in FY25 and 1.3% in FY23 — this is normalization plus mix improvement, not a cyclical top. On insider activity: 10K shares sold on 8/11 against a $17.65B cap is noise, and the F-InKind transactions are tax-withholding on vesting, not discretionary sales. Labeling this "insiders cashing out during historic turnaround" is overreading a rounding error. The Neutral Insider Activity secondary signal is the honest read.
The synthesis fair value of $168–$204 is probably too generous — a DCF assuming 5% revenue CAGR and 8% steady-state margins on $17B growing gets you to ~$1.4B sustainable earnings, and 15x that (a reasonable multiple for a government services compounder with defense budget uncertainty) is ~$21B equity, or ~$167/share. So the low end of synthesis is credible; the signal-adjusted $204 requires believing margins hold at 8.5%+ and multiple re-rates to 17x+, which is a stretch given genuine defense-budget political risk into 2027 appropriations. A contrarian would argue: (1) DOGE/efficiency-cuts risk to civilian contracting is real and underpriced, (2) the Health segment has had contract-loss issues historically, (3) revenue growth of 3% YoY with government contract lumpiness could easily print flat or -2% next quarter, and (4) 12.6x P/E is actually in-line with peer LMT (~19x), NOC (~18x), but closer to SAIC (~15x) and BAH (~13x) — the "cheap vs peers" case is weaker than it looks once you narrow to services-not-platforms.
Net: I'm closer to the synthesis than to the Market Forces skeptic, but not as bullish. This is a $150–170 stock in my model, not $200. At $140, you're paying 12.6x earnings and a 9% FCF yield for a business that grows 3-5% with 19% ROIC and durable government demand — that's a good but not extraordinary risk/reward. The Thesis Evaluation's -17 score overweights speculative bear cases (insider "cashing out," margin regression) that the data doesn't cleanly support. The Narrative Economics layer is right that fundamentals are doing the work — which means the answer is mechanical: cheap on cash flow, moderately cheap on earnings, fairly valued on peer multiples. Starter position at current levels makes sense; I'd add aggressively below $125 and trim above $170. The 12-month path likely requires a defense-budget clarity catalyst or a good Q3 print to break out of the 12x P/E range the market has anchored to.
GPT Reading
Leidos looks like a classic case where the screen says “cheap mature contractor,” but the underlying numbers are better than that caricature. Revenue has climbed from $13.74B in 2021 to $17.17B in 2025, about 5.7% annualized, and the more important shift is profitability: operating income rose from $1.09B in 2022 and a depressed $621M in 2023 to $1.83B in 2024 and $2.11B in 2025, while net income recovered from just $199M in 2023 to $1.45B in 2025. That is not just accounting noise if you pair it with cash generation: 2025 operating cash flow was $1.75B and free cash flow $1.63B on only $125M of capex. At a $17.65B market cap, that is roughly a 9% FCF yield on a business with government-backed demand, 8%+ net margins, and mid-single-digit top-line growth. For a company earning nearly 29% ROE and 19% ROIC, 12.6x earnings and 8.9x EV/EBITDA is not demanding.
The recent quarterly run also argues against the idea that this is merely a one-quarter peak. Revenue stepped from $4.19B in Sep-2024 to $4.37B, $4.25B, $4.25B, $4.47B, $4.21B, $4.40B, and now $4.56B. That is not explosive growth, but it is steady expansion on a very large base. Net income margins have mostly lived between 7.5% and 9.2% over the last seven quarters, aside from one 6.5% quarter, which suggests the earnings recovery has stabilized rather than immediately rolled over. The latest quarter at $4.56B revenue and $354M net income implies 7.8% margin, below the 9.2% high from mid-2025 but still solidly above the weak periods that skeptics fear it will revisit. In other words, the market seems to be valuing Leidos as though normalized margins are headed back toward something like the 2023 reset, while the actual quarterly cadence says normalization has already happened and remains attractive.
The balance sheet is acceptable rather than pristine, but acceptable is enough here because the cash engine is strong. Total debt of $4.65B against $1.11B of cash leaves about $3.5B net debt, around 2.1x annual FCF or roughly 1.7x trailing operating income. Equity is $4.96B, so leverage is noticeable, yet not stretched for a business with this level of contractual visibility and a 1.70 current ratio. I also would not overread the insider sales. Two August sales totaling 10,000 shares are modest relative to a $17B company and sit alongside routine awards and in-kind transactions. If there were a real insider exodus into a cyclical peak, I would expect a much more sustained pattern and larger absolute dollar amounts.
The strongest pushback is that the market may be right to cap the multiple because Leidos is still a low-growth integrator in a politically exposed end market, and some of the earnings rebound is plainly from a trough year that makes the growth optics look better than they are. Revenue growth in the latest year was only about 3.1%, and quarterly margins have already eased from 9.2% in Jul-2025 to 7.5%-7.8% in the last three reported quarters. If you believe 8% net margin is closer to the ceiling than the floor, then 12.6x earnings is not especially cheap; it is just normal. A bear would also note that the huge earnings CAGR is flattered by the 2023 collapse, book value is only $4.96B against a $17.65B market cap, and the business deserves no premium because it lacks a durable high-growth engine. Those are fair objections. I weigh them less heavily because even after haircutting margin assumptions, the stock still screens inexpensive on cash flow, and the company has now posted multiple consecutive quarters proving the 2023 earnings impairment was not the new baseline.
What would change my mind is straightforward. If revenue slips back below roughly $4.2B per quarter while net margin falls into the 6%-7% range for several quarters, the “durable higher earnings base” thesis is wrong and this deserves only a market multiple on lower earnings power. Likewise, if annual free cash flow drops materially below $1.3B without a clear one-time explanation, the valuation support weakens fast. On the other hand, if Leidos can sustain quarterly revenue above $4.4B and net margins around 8%, then earnings power is closer to $11-$12 per share and the current $140.66 price is too low for the quality and resilience on display.
Grok Reading
Leidos at $140.66 is a cash compounder the market is still treating like a damaged goods contractor. Annual revenue climbed from $13.74B in 2021 to $17.17B in the year ended January 2026, a 5.5% CAGR that looks pedestrian until you stack it against the earnings recovery: net income went from the $199M trough in 2023 (when operating income collapsed to $621M) to $1.25B then $1.45B, with operating margin now 12.3% and net margin 8.4%. The last eight quarters show revenue oscillating in a tight $4.19–4.56B band and net margins holding 7.5–9.2% without a cliff—$4.56B and 7.8% in the most recent print is not a peak that is already rolling over. Free cash flow of $1.63B on only $125M of capex is the real story: roughly 9.2% FCF yield on the $17.65B equity value, ROIC at 19%, ROE at 29%. At 12.6x trailing earnings, 8.9x EV/EBITDA and 1.06x sales, the multiple embeds almost no credit for the margin reset or the cash conversion. The 2023 hole was real, but the four years around it show a business that structurally earns more than it did pre-trough, not a one-quarter sugar high.
What stands out against the model stack is the split between the valuation synthesis (composite fair value $169–204, undervalued) and the market-forces/thesis layers calling it fairly valued on imminent margin compression to 6–7%. The underlying data does not yet support that bear regression. Gross margin has stepped from ~14.5–15% earlier in the decade to 18.0%; operating income more than tripled off the 2023 low and is running well above the $1.1B level of 2021–22. Quarterly net margins have been stable in the high-7s to low-9s for two years, and revenue confidence is tagged high with a steady trend. Insider activity is being over-weighted: the recent prints are a mix of small open-market sales (8,500 and 1,500 shares) and F-InKind tax withholdings on awards—noise, not a cluster of large discretionary liquidations. Debt of $4.65B against $4.96B equity and $1.11B cash is real leverage, but $1.75B of operating cash flow covers it comfortably. The market is anchoring on “slow-growth govcon at 12x is fair” while under-paying for an 19% ROIC franchise that converts nearly all earnings to FCF.
The strongest opposing case is straightforward and deserves weight. Organic growth is only 3.1% recent YoY; a government-services middleman with limited pricing power can see bid pressure and mix shift reverse. The 2023 earnings collapse proved that one-time charges, contract timing, or cost overruns can erase hundreds of millions quickly, and political defense-budget cycles remain a macro headwind the secondary signals already flag. If net margins mean-revert toward the mid-6s and the earnings power settles closer to $1.0–1.1B rather than $1.45B, then 12.6x is not a discount—it is the right multiple for a 4–5% grower with budget risk, and the DCF gap closes the wrong way. Sell-side and the thesis engine are correct that there is no cult narrative or re-rating catalyst baked in; this only works if the cash keeps showing up. I weigh that against the multi-year evidence that gross and operating margins have structurally lifted with the mix toward cyber, classified, and digital modernization work, and against an FCF yield that already compensates for low top-line growth. Neglect and skepticism are priced; a second collapse is not the base case in the numbers in hand.
Margin prints that settle sustainably below 7% net, a couple of quarters of flat-to-down revenue with book-to-bill deterioration, or a clear multi-year defense outlay cut that hits the civil/health/intel mix would flip me to fair-or-worse. Conversely, another year of $1.5B-plus FCF and net margins holding 8% would make the current $141 entry look clearly cheap even without multiple expansion.
Qwen Reading local experiment · off-panel
The number that actually matters here is the free cash flow yield: $1.63B of FCF against a $16.88B market cap is 9.7%, and that's before the 1.24% dividend. Pair that with 19% ROIC and 29% ROE, and you're looking at a business that converts capital into cash at a rate that would make most SaaS founders envious, yet it trades at 12.3x trailing earnings. The 169.8% earnings CAGR that the momentum model spits out is, frankly, a mirage — it's the arithmetic of recovering from the 2023 SBC-scandal trough where operating income cratered to $621M on $15.44B of revenue (a 4.0% operating margin, the worst in the five-year set). Strip out that one-year disaster and the "growth" story is 3.1% recent revenue growth and a slow grind from 7.6% to 12.3% operating margin over four years. That's not a growth stock. That's a cash-flow annuity with a government customer base that renews every few years. And at 9.7% FCF yield, the market is paying you roughly 11% all-in to hold it, which is a wide spread over the 4.3% 10-year.
What gives me pause is the quarterly margin trajectory, and it's the one data point the bullish models underweight. Net margin peaked at 9.2% in the July 2025 quarter, then walked down to 8.2%, 7.8%, 7.5%, and 7.8% over the next four quarters. The annual 8.4% net margin for fiscal 2026 is being propped up by the stronger first half. If the 7.5% print in April 2026 is the new steady state rather than a dip, trailing earnings of $1.45B compress toward $1.25B, pushing the effective P/E closer to 14.5x. That's still reasonable, but it erodes the "cheap" framing. The Market Forces model's $90–110 fair value range is, in my view, too punitive — it implies a 6–7x multiple on a business generating 9.5% FCF margins with 19% ROIC, which is a distressed-credit valuation applied to an investment-grade cash flow. But the Valuation Synthesis $173–191 range is equally lazy, because it assumes the 12.3% operating margin holds or expands, which the quarterly data is actively arguing against.
The insider tape is a minor irritant, not a signal. Two sales in August 2026 totaling 10,000 shares (~$1.4M at current prices) alongside a string of small RSU awards in May and June is the normal churn of a mid-cap defense contractor's executive team. Nobody is dumping a position; these are routine tax-lot dispositions. I'd give this a neutral read, which is what the secondary signals say, and I don't think the thesis-evaluation layer's "insiders cashing out during a historic turnaround" framing earns more weight than that. The real risk isn't insider behavior; it's the political cycle. A change in administration that trims the defense budget or delays recompete cycles would hit a company whose revenue is 90%+ government-derived, and the 3.1% revenue growth rate leaves almost no cushion.
The strongest case against my own read is the margin-compression trend combined with the modest growth rate. A smart bear would point out that Leidos is not a compounder — it's a services business with 18% gross margins, 12% operating margins, and 3% top-line growth, and the "turnaround" narrative is really just the absence of the 2023 disaster. They'd argue that 12.3x P/E on a 3% grower with compressing margins is not a discount, it's the correct price, and that the 9.7% FCF yield is the market's way of saying "we don't think this cash flow is as durable as you'd like." I weigh this differently because the FCF conversion is genuinely strong — $1.75B operating cash flow against $1.45B net income means the earnings are real, not accounting-driven, and the $125M capex requirement is trivially low. The business doesn't need to reinvest heavily to maintain its position. That's a structural advantage over most tech-adjacent services firms.
What would flip me: a quarterly net margin print below 7.0% would confirm the compression is structural, not cyclical, and I'd move to fairly valued or even overvalued at $137. Conversely, a defense budget authorization that locks in multi-year funding above current levels, or a contract win in the $500M+ range in cybersecurity or classified systems, would validate the margin expansion thesis and push me toward the $160–175 range. A dividend increase above 2% would also change the income-investor calculus materially. Until one of those catalysts lands, this is a hold-and-collect situation, not a buy-the-dip trade.
Big-3 Panel — where each AI stands
Advanced Analysis Forensic deep-dive · separate lenses
Revenue has grown from 13.74B to 17.17B over the series (roughly 4-5% CAGR) while operating margin has expanded materially from 8.4% to 12.3% and gross margin from 14.7% to 18.0%. Net income has scaled from 753M to 1.45B and FCF from 927M to 1.63B, with OCF/NI at 2.2x and accruals at -3.1% of assets - earnings are cash-backed and mechanical fraud screens (Beneish -2.6, Altman Z 3.69) are clean. This is a mature government-services earner executing well, not a story stock. Capital allocation is shareholder-friendly: diluted shares have fallen from 143M to 130M (-2.4% CAGR), SBC is a modest 0.6% of revenue, and buybacks run 4.3x SBC - per-share value is being concentrated. The one genuine constraint is the balance sheet: net debt of ~3.54B against 1.11B cash means liquidity is a constraint, not a cushion, though 1.63B annual FCF services it comfortably. Insider tape is neutral-to-slightly-negative (5 sales, 0 open-market buys in 12 months, ~1.9M sold), consistent with normal executive liquidity rather than a signal. The 2023 net income dip to 199M (on flat margins) warrants a look but subsequent recovery to 1.45B suggests it was a one-off charge year, not structural.
Verify before trusting this (5)
- What drove the 2023 net income collapse to 199M - impairment, contract loss, or one-time charge?
- Customer concentration - what % of revenue is U.S. federal government and any single-agency exposure?
- Debt maturity ladder and covenants on the ~4.6B gross debt implied by net debt position
- Backlog trend and book-to-bill ratio to confirm revenue durability
- Pension/OPEB and any off-balance-sheet obligations typical of legacy defense contractors
The e2e composite fair value of $168.60 pegs deserved value ~20% above the $140.66 price; the signal-adjusted $204 FV I discount heavily as it likely extrapolates margin expansion aggressively. The DCF at $213.84 and anchored P/E at $170.30 bracket a reasonable range, while the EPV floor at $76.43 shows this is not a deep-value situation - you are paying meaningfully above no-growth value, which is fair for a business converting >100% of earnings to cash and quietly buying back stock. Earnings quality is clean (score 3), so no haircut is warranted. Net debt of ~$3.5B against ~$1.6B FCF is a modest deserved-value drag but nothing more. What is priced in: the market appears to assume defense budget pressure and mid-single-digit growth with margins plateauing. What has to go right to justify $170+: margins hold near current levels and revenue keeps compounding mid-single-digits - not heroic. That is why I lean cheap rather than fair, but the gap is not screaming. A strong business at a fair-to-slightly-discounted price is the honest read; call it modestly cheap with ~15% margin of safety against the anchored P/E, less against the composite.
Verify before trusting this (4)
- Forward revenue and margin guidance in the next print - are the recent margin gains structural or cyclical
- Backlog and book-to-bill trend for signs of budget-cycle pressure
- Capital allocation split between buybacks and debt paydown
- Any one-time contract wins or health segment items inflating trailing FCF
LDOS is a low-beta (0.55) government services name with a durable but low-intensity narrative - a 'steady compounder' the market simply isn't excited about. The risk-on tape (+35) is a modest tailwind for equities broadly, but this stock barely inhales it: high-beta AI and story names capture that oxygen, not defense middlemen. VIX at 14.4 and a calm regime mean no risk-off mauling either, so macro pressure is largely muted here. The narrative intensity is 'minimal' with 'low' cult - meaning there is no story bid supporting the multiple, and no story collapse threatening it. Fundamentals are doing the work (Q2 beat drove the +9.86% and +6.62% pops in early August), which is exactly the tell: this stock moves on earnings prints, not on tape or narrative flow. Analyst tone has been broadly positive on AI expansion, a small tailwind, but not enough to ignite momentum. Net: a mild crosswind, tilting very slightly positive on the calm tape and post-earnings afterglow, offset by the absence of any narrative engine and lingering political/budget overhang on defense spend.
Verify before trusting this (4)
- Whether analyst target revisions post-Q2 have actually moved higher (not just tone)
- Any FY2027 defense budget signals or continuing-resolution risk
- Rotation flow into defensives vs high-beta tech - if tape turns risk-off, LDOS becomes a relative winner
- Health segment commentary in next print - the one soft spot in the story
The world Leidos sells into is spending more on defense, intelligence and cyber, but buying it under tighter fiscal scrutiny. That splits the outcome: demand volume is safe, price and margin are not. Allied rearmament and mission-software/sensor demand are real, company-specific pull; US civilian-agency cost-cutting and appropriations delay are real, company-specific drag. AI is a mixed vector here — it can compress billable-hours services work, but Leidos' delivery is embedded in accredited, security-cleared mission systems where substitution is slow and procurement-gated, so intermediation risk is a years-out issue, not a next-year one.
When we made this prediction on Aug 31, 2026, LDOS was $142.28. We expect it to be $164.50 by Mar 2027, and we consider it great value under $125.00. This is an early model (v0.6.0) — the direction is more reliable than the exact price. Made Aug 31, 2026.
Blue is our prediction, starting the day we made it. Grey is a slower route to the same place — the same destination, taking longer. Black is the actual price, so you can see how we are doing.