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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 2026-08-23): Designation Gem · Gem Score +41 (−100…+100 Quality+Value blend) · Quality 57 · Value 28 · Sentiment 40 (timing only, not weighted) · Composite fair value $184.45 vs $144.87 at analysis
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profile-header/price-overview— company profile, live quote, market capextended-analysis— the core: three AI lens reads with findings, scores, and the analyst memofuture-predictions— our forward price-band predictionsmarket-narrative/ai-findings/gpt-critique— narrative context, cross-model findings, and an adversarial critique of our own analysis (near the end of the document)- Members-only sections (render as login gates for anonymous readers):
price-history,income-trend,key-metrics,financials(statement tables),insider-trading. The analysis above is public; the raw data tables require a free account.
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any ticker resolves at delvantic.com/stock/TICKER ·
raw inputs are public-company filings and market data (via licensed data feeds);
every model, score, lens read, and prediction on this page is Delvantic's own analysis.
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: $117.55
Net Income: $1.45B
Industry Benchmarks
Income Statement (Annual)
Last updated: Aug 3, 2026 12:55pm (20d 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 (20d 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 3, 2026 12:55pm (20d 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 3, 2026 12:55pm (20d 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 3, 2026 12:31pm (20d 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 — if the last quarter repeats
Live · as of 2026-08-20 11:11Recovery pays +35%; another quarter like the worst recent one costs 14%. Ratio 2.5:1.
| Case | Growth | Margin | Fair value | vs price ($144.87) |
|---|---|---|---|---|
| Bull — recovery | +8% | 9.2% | $196.14 | +35% |
| Base — stabilizes | +5% | 8.0% | $157.97 | +9% |
| Bear — keeps slipping | +3% | 6.8% | $124.83 | -14% |
| Stress — last quarter repeats | -4% | 8.6% | $124.11 | -14% |
Narrative Economics
market-narrative step).
AI Lens 4th lens · how AI reaches this business · 5-yr
2026-08-13On firm-fixed-price and solution-type work (security detection systems, digital modernization, QTC exam processing), AI cuts Leidos's own delivery labor while contract price holds — the exact mechanism visible in gross margin moving 14.5% to 18% and operating margin 4% to 12.3%.
A large share of revenue is still cost-reimbursable and headcount-indexed: if AI lets Leidos do the same mission with fewer cleared FTEs, the reimbursable revenue line shrinks even as the mission is served better, and government cost auditors will ask for the savings.
Whether AI productivity lands in fixed-price/solutions contracts (Leidos keeps it) or cost-plus staffing contracts (customer keeps it). Watch the disclosed FFP share of backlog and revenue-per-employee trend against headcount.
Security clearances at scale, accredited classified facilities, ATO'd systems inside agency networks, past-performance qualification, and incumbent positions on multi-award vehicles — none of which cheap code creates.
AI Lens thesis
AI reaches Leidos through three doors of unequal size: it deflates the cost of the engineering labor Leidos sells (bad where billing is per-hour, good where price is fixed), it raises the value of Leidos's product-shaped assets like AI-assisted threat detection in security screening and automated medical-exam adjudication, and it lowers the cost of building mission software — which arms Palantir/Anduril-style AI-native vendors that sell agencies finished capability instead of integration labor. The offsetting force is that the binding constraint in federal work is not software capability but clearance, accreditation, procurement standing and accountability for mission failure, all of which AI leaves intact and arguably makes scarcer as the software layer commoditizes. Net: a modest structural positive if mix keeps shifting toward outcome-priced work, a slow bleed if it does not.
What the market may be underestimating
Upside QTC health exam adjudication and security-detection screening are process-industrial businesses where AI removes reviewer and operator labor from a price the government does not renegotiate per unit of Leidos effort — pure margin conversion the market still models as a services business.
Downside Federal efficiency mandates increasingly cite AI as justification to cut services contracts outright; the risk is not that Leidos loses a competition but that the scope is deleted, which never shows up as a competitive-loss headline.
Outcome range spread 42
Growth Outlook
Analyzed 2026-08-20 11:08The 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
Working from the raw quarterlies first: revenue has been remarkably flat in a narrow $4.19-4.56B band for eight quarters, with the two most recent prints ($4.40B, $4.56B) finally breaking meaningfully above the year-ago comps ($4.25B, $4.19B) — call it ~5-6% organic in H1 fiscal 2026. But net income is going the wrong way at the margin: 9.2% in Q2'25 → 8.6% → 8.2% → 7.8% → 7.5% → 7.8%. That's roughly 140bps of net margin compression over four quarters, and it's the story the models are politely dancing around. FY2026 (Jan close) delivered $17.17B/$1.45B NI, up from $16.66B/$1.25B — nice on the surface, but the second-half deceleration is unmistakable and the "169.8% earnings CAGR" the momentum module is proudly quoting is entirely a rebound from the 2023 restructuring trough of $199M NI. That's base-effect noise, not a compounding rate.
The balance sheet number stated — $20M total debt against $4.96B equity — is either a data error (netting revolver against something) or a classification quirk. Leidos historically carries ~$4.5-5B of long-term debt from the Lockheed IS&GS and Dynetics deals; the 0.004 D/E and 7.2x EV/EBITDA implied by essentially zero net debt look inconsistent with a $18.4B market cap giving ~$17.3B EV — that math only works if net debt is genuinely negligible, which contradicts every prior 10-K I recall. I'd flag this as stale/mis-tagged before believing the ROIC of 41.7% (which is also implausible for a services business with 18% gross margins). The synthesis model's $184-248 fair value leans on these figures; anchor caution accordingly.
The prior models are internally contradictory and I side with Market Forces over Synthesis. Synthesis says "+71% upside" while flagging its own methods disagree; Thesis Evaluation scores +4 (basically neutral); Narrative correctly diagnoses this as fundamentals-driven with no story premium. The 2.32x accrual ratio Market Forces cites is the tell — reported earnings quality is deteriorating even as FCF looks strong ($1.63B FCF vs $1.45B NI is fine, but the quarterly NI trajectory says the P&L is being flattered somewhere that's about to reverse). Insider activity is net negative in August (10K shares sold, only awards and in-kind tax withholdings otherwise) — not alarming, but not the pattern you see when insiders think shares are 40-70% undervalued.
Contrarian read: at $146, LDOS trades 13x trailing earnings and ~1.0x sales on a business with genuine 3-5% top-line growth, mid-teens ROE, and $1.6B FCF (8.9% FCF yield on market cap). That is not expensive. But the bull case requires believing the 8-9% net margins of 2025 return, not the 7.5-7.8% of 2026 stabilizing lower — and quarterly data says the latter is happening in real time. Defense IT budget risk in a continuing-resolution/DOGE-adjacent environment is real; the software-displacement bear (Palantir, Anduril, C3.ai eating SI scope) is understated by every model here except Thesis. Fair value on my numbers: apply 14x to a normalized $6-6.50 EPS = $85-90 floor, apply 8% FCF yield to $1.6B = $20B EV or ~$160/share. That's a $150-165 fair value range, essentially where it trades. The synthesis $248 number is fantasy — it's extrapolating post-restructuring earnings recovery as a permanent growth rate.
I dissent from the synthesis "undervalued by 71%" reading and agree with Market Forces' "show me" framing. This is a fairly-valued mature contractor with a mild negative margin inflection that needs one or two more quarters to confirm. Not a short — the FCF and defense positioning are real — but the +$180 target requires margin recovery that the trajectory contradicts. Wait for either (a) Q3'26 margin stabilization above 8% or (b) a pullback to $125-130 which would offer a genuine 10% FCF yield and margin of safety.
GPT Reading
Leidos looks cheaper than it deserves to be. What jumps out first is not growth, which is only modest, but the quality and durability of the earnings base. Revenue has moved from $13.74B in 2021 to $17.17B in 2026, about 4.6%-5.5% annualized depending on the exact start point, and the quarterly run-rate now sits around $17.8B-$18.2B annualized with the latest quarter at $4.56B, up 7.3% sequentially and 7.3% versus the $4.25B quarter a year earlier. More importantly, profitability has clearly stepped up after the 2023 trough: operating income rebounded from just $621M in 2023 to $1.83B in 2025 and $2.11B in 2026, while net income rose from $199M to $1.45B over the same span. That is not a story of a business barely hanging on; it is a story of a contractor that worked through a bad year and emerged with 12.3% operating margins and 8.4% net margins on a much larger revenue base. The last eight quarters show net margins mostly between 7.5% and 9.2%, which suggests the earnings reset is real, not a one-off spike.
The second thing that stands out is the balance sheet and cash conversion, which make the current multiple hard to dismiss. The company has only $20M of debt against $1.11B of cash, so this is effectively net-cash. Free cash flow of $1.63B on $1.45B of net income is excellent conversion, especially with capex only $125M. At a market cap of $18.36B, that is roughly an 8.9% FCF yield; on enterprise value, it is even better because EV is only modestly above $17B given the cash-rich capital structure. A 13.1x P/E, 7.2x EV/EBITDA, and 1.0x EV/revenue are not demanding for a business producing ROE near 29%, ROA above 10%, and reported ROIC above 40%. For a government IT and defense services platform with sticky contracts and visible demand, those are “steady compounder with no premium” numbers. If Leidos can simply hold earnings around the current annualized pace of roughly $1.3B-$1.4B and continue converting that to $1.5B+ of FCF, a price in the mid-$160s to mid-$170s looks more reasonable than $146.
What I do not buy is the implication from some of the more cautious framing that the market is mainly worried about a broken earnings model. The raw data say otherwise. Quarterly revenue has been remarkably stable around $4.2B-$4.6B, and net income has been consistently above $320M in the last four quarters after dipping to $284M in the January 2025 quarter. Gross margin improved from 14.5% in 2023 to 16.8% in 2025 and 18.0% in 2026. That kind of progression is meaningful in this business. If this were a low-quality margin story built on aggressive accounting, I would expect more leverage, weaker cash conversion, or lumpier quarterly profitability. Instead, I see the opposite: strong current ratio at 1.70, negligible debt, and annual operating cash flow of $1.75B. The company is being valued like a plain-vanilla outsourcer even though the economics now look better than that.
The best case against my view is straightforward: Leidos may simply be at peak margins. The 2023 collapse to $621M of operating income and just $199M of net income is a reminder that this business is not immune to program issues, contract mix swings, or restructuring mistakes. Recent quarterly net margins of 7.5%-7.8% are below the 9.2% seen in July 2025, which could mean the easy recovery is over. Revenue growth is also not exciting: annual revenue rose only 3.1% in 2026, and if the business settles into 2%-4% top-line growth with flat margins, then 13x earnings may be fair rather than cheap. The insider activity does not help sentiment either; while the disclosed transactions are small and look more routine than alarming, there are recent outright sales and no open-market buying to counterbalance them. And the extremely high reported ROIC may flatter the economics because it benefits from a lean balance sheet and whatever accounting distortions followed the 2023 reset; I would not underwrite the stock on that metric alone.
Still, I weigh those risks less heavily because the current price already assumes a lot of skepticism for a company with this financial profile. If earnings were fragile, I would expect leverage to be higher or cash generation to lag profits; instead FCF exceeds net income and the balance sheet is fortress-like. If the market is worried about budget or contract cycles, that deserves some discount, but not necessarily a 13x multiple for a business that has rebuilt from a bad 2023 into a $1.4B+ earnings and $1.6B+ FCF franchise. What would change my mind is a clear break in that stability: quarterly revenue falling back below $4.2B, net margin slipping toward 6% again, or annual FCF dropping materially below $1.3B despite stable revenue. Conversely, if the company sustains quarterly net income in the $325M-$375M range and keeps free cash flow around current levels, I think the stock should rerate above $160 and could justify something closer to $175 without heroic assumptions.
Grok Reading
Leidos is printing roughly $1.63B of free cash flow on an $18.4B equity value, a near-9% FCF yield, while carrying essentially zero net debt—$20M of total debt against $1.11B of cash—and generating a 41.7% ROIC and 29% ROE. That is not the balance sheet or cash conversion of a business the market should be pricing at 13.1x earnings and 1.0x sales. Annual revenue has compounded from $13.7B in 2021 to $17.2B in the latest year at a 5.5% CAGR; the last four quarters alone put the run-rate near $17.6B with sequential growth intact ($4.21B → $4.40B → $4.56B). Net margins have stabilized in the 7.5–8.2% band after the 2023 trough (when operating income collapsed to $621M and NI to $199M), and the latest annual operating margin of 12.3% and gross margin of 18.0% sit well above the distressed year. The earnings CAGR of 170% is an artifact of that trough, but the underlying recovery is real: NI of $1.45B versus $1.25B the prior year, and recent quarterly earnings still growing mid-teens year-over-year. At $146, the stock is asking investors to believe this cash engine will shrink—exactly the market belief the thesis layer flags—despite a sticky government-IT and defense portfolio that historically compounds mid-single digits.
What stands out against the models is the gap between the quantitative “fair value” math ($184 composite, signal-adjusted as high as $248) and the market’s refusal to re-rate. The rule-based archetype correctly tags this as a mature earner; the narrative layer correctly notes intensity is minimal and fundamentals dominate. Yet the valuation synthesis’s “fair_value” label is inconsistent with its own +71% upside math and with a 7.2x EV/EBITDA multiple on a business throwing off $1.75B of operating cash with almost no capex intensity ($125M). Margin normalization from the 2023 restructuring is largely done; the remaining debate is whether 18% gross and ~8% net can hold, not whether the company is a going concern. Insider activity is light selling and tax-related F-shares, not a wave of conviction exits, and revenue confidence is high on a steady quarterly trend. The numbers tell a story of a high-quality government contractor that the market is still treating as if 2023’s one-time margin shock is the steady state.
The strongest case against owning it here is straightforward: revenue growth is only 3% recently and 5.5% through-cycle, defense and civil IT budgets face real resolution risk in a contested fiscal environment, and systems integrators are structurally exposed to software vendors and cloud hyperscalers taking work that used to sit inside cost-plus and T&M contracts. A smart opponent would also note the slide in quarterly net margin from 9.2% (mid-2025) to 7.5–7.8% in the two most recent prints, the elevated accrual ratio flagged in the market-forces layer, and the fact that a 42% DCF discount may simply be the market correctly haircutting optimistic terminal growth rather than “mispricing.” If labor inflation or contract repricing pushes net margins back toward 6%, or if budget CRs freeze award velocity, the 13x multiple is not a floor. I weigh those risks as real but already embedded: you do not get a 9% FCF yield, sub-1.1x sales, and a fortress balance sheet unless the market has already underwritten stagnation. The bear case requires actual FCF decay, not just slow growth.
I would flip to neutral or bearish if the next two quarters show net margins breaking below 7% on a sustained basis, if FY free cash flow falls under $1.3B, or if a prolonged CR environment drives backlog conversion and book-to-bill materially under 1.0x with management cutting the medium-term growth frame. Confirmation of 8%+ net margins and another year of $1.6B+ FCF with mid-single-digit top-line growth would, conversely, force a higher multiple and validate the undervaluation.
Big-3 Panel — where each AI stands
Advanced Analysis Forensic deep-dive · separate lenses
Leidos looks like a well-run mature earner. Revenue has climbed steadily from $13.74B to $17.17B (roughly 4-5% CAGR), and the more meaningful story is the margin inflection: gross margin expanded from 14.7% to 18.0% and operating margin from 8.4% to 12.3%, driving net income from $753M to $1.45B and FCF from $927M to $1.63B. OCF/NI of 2.2x and accruals of -3.1% of assets confirm the earnings are cash-backed, and Beneish M of -2.6 with Altman Z of 3.74 show no mechanical red flags. The 2023 net income dip to $199M looks like a one-time charge given FCF held at $958M that year - worth confirming.
Verify before trusting this (5)
- Nature of the 2023 net income drop to $199M - was it a goodwill impairment or contract charge?
- Customer concentration - what % of revenue is US federal/DoD, and largest single-agency exposure
- Backlog size, book-to-bill ratio, and re-compete risk on major contracts
- Debt maturity schedule and covenants (net cash is positive but gross debt levels unknown here)
- Whether margin expansion reflects mix shift to higher-value work or is cyclical
The composite FV of $184.45 implies roughly 27% upside from $144.87, and the DCF ($206.79) and anchored PE ($210.42) both cluster in the $200s while the EPV floor sits at $113.78 - i.e. even a no-growth capitalization of current earnings is only ~21% below today's price. That EPV floor is the key anchor: it says you are paying a modest premium to steady-state earnings power, with the growth options thrown in cheaply. The signal-adjusted FV of $248.51 (71% upside) is almost certainly a runaway output - a defense IT services firm with mid-single-digit growth and structurally modest margins does not deserve a ~17x jump above the EPV floor - so I discount it heavily and anchor on the $180-210 range. Earnings quality is high and the Company-Quality lens grades this Strong, which supports rather than inflates deserved value; buybacks funded by real cash and FCF > NI mean the per-share math is honest. What is priced in at $145: low-to-mid single digit growth, stable margins, continued government spending. What is NOT priced in: any re-rating for cyber/cloud tailwinds or successful M&A. Bear case (labor inflation, contract repricing, customer concentration) is real but already partially reflected in the ~7-8x EBITDA type multiple implied here. Net: modestly cheap, not a table-pounder.
Verify before trusting this (4)
- Organic revenue growth vs acquired growth in latest 10-Q
- Book-to-bill and backlog trend for margin/repricing risk
- Free cash flow conversion and buyback cadence guidance
- Any large recompete losses or contract award concentration disclosed in transcripts
The macro tape is mildly risk-on (VIX under 15, S&P near highs) and LDOS's 0.55 beta means the tape barely moves it either way - so the market regime is a soft, not decisive, tailwind. Where the real push is coming from is stock-specific: two large post-earnings pops (+9.9% and +6.6% in early August) on a Q2 beat and raised 2026 guide, plus follow-through news framing LDOS as an AI-in-defense play (OpenAI partnership, AI expansion across cybersecurity and logistics). That is a genuine, if quiet, positive news tone landing on a name the market usually ignores. Analyst tone per the 8/19 coverage is 'moderately optimistic' despite noted underperformance - a mild positive skew, not a re-rating catalyst. The narrative itself is minimal-intensity and steady-compounder in archetype, so there is no cult bid and no story to collapse; the name lives or dies on execution prints, and the most recent print was a good one. Net: modest, durable-feeling tailwind from earnings momentum and an emerging AI-defense framing, dampened (not offset) by the fact that this is a low-beta, low-narrative name that sentiment simply does not move much.
Verify before trusting this (4)
- Whether the AI-in-defense framing gets picked up by a sell-side re-rating note or stays background color
- Next contract-award news flow - a large DoD or intel win would extend the earnings-driven tailwind
- Any softening in the risk-on tape (VIX pop, rotation out of defense) that would test the low-beta thesis
- Target-price revisions following the raised 2026 guide - laggard analysts catching up would be a fresh push
AI reaches Leidos through three doors of unequal size: it deflates the cost of the engineering labor Leidos sells (bad where billing is per-hour, good where price is fixed), it raises the value of Leidos's product-shaped assets like AI-assisted threat detection in security screening and automated medical-exam adjudication, and it lowers the cost of building mission software — which arms Palantir/Anduril-style AI-native vendors that sell agencies finished capability instead of integration labor. The offsetting force is that the binding constraint in federal work is not software capability but clearance, accreditation, procurement standing and accountability for mission failure, all of which AI leaves intact and arguably makes scarcer as the software layer commoditizes. Net: a modest structural positive if mix keeps shifting toward outcome-priced work, a slow bleed if it does not.
Verify before trusting this (8)
- FFP share of revenue and backlog
- Revenue per employee trend
- DCAA cost-savings clawback pressure
- Headcount vs revenue divergence
- Mix shift to per-unit/outcome pricing
- Recompete rate-card compression
- Share of awards going to product vendors
- Recompetes restructured as software licenses
The world is splitting IT services into two economies. Commercial discretionary IT — staffing-led integration, generic managed services — is contracting as clients defer projects and as automation compresses billable hours; that is the category number Leidos is measured against. Government mission work is on a different clock: national security, screening, cyber and health-systems modernization are appropriated, multi-year and politically defended, so demand persists through a commercial downturn. Leidos sits almost entirely on the resilient side, which explains the divergence rather than making it a mystery. The genuine forward tension is not demand but price and margin: procurement is drifting toward efficiency reviews, tighter fee structures and consolidated vehicles, meaning the volume can keep growing while the profit per dollar of revenue slowly erodes — exactly the pattern the latest prints show (revenue up, operating income down). Macro is neutral-to-mildly adverse: a 4.71% 10-year raises the cost of the debt-funded M&A that has historically supplemented organic growth.
When we made this prediction on Aug 20, 2026, LDOS was $142.04. We expect it to be $168.50 by Feb 2027, and we consider it great value under $130.00. This is an early model (v0.6.0) — the direction is more reliable than the exact price. Made Aug 20, 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.