Leidos
LDOS
$141.39
+0.01%
Leidos Holdings, Inc. is a technology, engineering, and science company that provides services and solutions in defense, intelligence, civil, and health markets, primarily to U.S. government agencies. As a leading player in the information technology services industry, Leidos is distinguished by its deep relationships with the DoD, Intelligence Community, and other federal entities, positioning it as a critical partner in national security and digital transformation. The current investor narrative centers on the company's record profitability and robust demand for its defense and health solutions, offset by concerns over government shutdown risks, cautious guidance, and a recent revenue miss that have pressured the stock. Additionally, the emergence of private competitors like Saronic in autonomous naval systems highlights potential disruption in the defense sector, while Leidos' dividend and strong cash flow reinforce its defensive appeal.…
LDOS
Leidos
$141.39
Related headlines
Investment Opinion: Should I buy LDOS Today?
Rating: Buy. Leidos offers a rare combination of defensive government exposure, record profitability, and a valuation that is 50% below the industry average. The consensus Buy rating and average target of $156.60 imply 10.8% upside, and the forward PE of 11x is undemanding for a company with positive earnings growth.
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LDOS 12-Month Price Forecast
The AI assessment leans bullish due to the significant valuation discount and strong cash flow, but confidence is medium given the decelerating growth and macro risks. The stock appears undervalued relative to peers, but the lack of growth catalysts could limit upside. If revenue growth reaccelerates above 5%, the stance would strengthen; if it falls below 2%, it would turn bearish.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Leidos's 12-month outlook, with a consensus price target around $156.60 and implied upside of +10.8% versus the current price.
Average Target
$156.60
0 analysts
Implied Upside
+10.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$125 - $225
Analyst target range
Leidos is covered by 15 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 2.35 (where 1 is Strong Buy and 5 is Sell). The average target price is $156.60, implying an upside of 10.8% from the current price of $141.39. The analyst sentiment is moderately bullish, with recent actions from firms like JP Morgan (Overweight) and Truist (Buy) reinforcing the positive outlook, though some downgrades (e.g., B of A Securities from Buy to Neutral) suggest caution. The target range spans from $125.00 to $225.00, with the low target reflecting concerns about government shutdowns and revenue growth, while the high target assumes successful execution of the company's growth strategy and potential multiple expansion. The wide spread of $100 indicates high uncertainty, but the average target still suggests upside, and the recent price recovery from the June low of $100 suggests the market is beginning to price in a more optimistic scenario.
Bulls vs Bears: LDOS Investment Factors
Leidos presents a classic value-versus-growth tension. The bull case rests on a compelling valuation (forward PE 11x vs industry 22x), record profitability, and strong cash flow, while the bear case centers on decelerating revenue, margin pressure, and government shutdown risks. Currently, the evidence slightly favors the bulls given the deep valuation discount and analyst upside, but the key swing factor is whether revenue growth can reaccelerate above 5% and margins stabilize. If growth stalls, the stock could remain range-bound; if it accelerates, the multiple could expand significantly.
Bullish
- Forward PE at 11x vs industry 22x: Leidos trades at a forward PE of 11.06x, a 50% discount to the industry average of 22x. This implies the market is pricing in significant earnings growth, but also suggests potential undervaluation if the company can sustain its profitability.
- Record profitability with EPS growth: Q1 2026 EPS of $2.60 exceeded Q4 2025's $2.53, and net income of $328 million reflects strong execution. The trailing PE of 16.35x is below the 5-year historical average, indicating the stock is cheaper than its own history.
- Strong free cash flow generation: Leidos generated $1.859 billion in trailing twelve-month free cash flow, supporting its dividend and buybacks. The payout ratio is only 14.5%, leaving ample room for capital returns and debt reduction.
- Analyst consensus Buy with 10.8% upside: With 15 analysts, the consensus is Buy (mean score 2.35) and the average target price is $156.60, implying 10.8% upside from $141.39. Recent upgrades from JP Morgan and Truist reinforce positive sentiment.
Bearish
- Revenue growth decelerating to 3.65%: Q1 2026 revenue grew only 3.65% YoY, down from 5.1% in Q4 2025 and 6.3% in Q3 2025. This deceleration, coupled with a revenue miss, triggered a 6% stock drop in February and raises concerns about future growth.
- Government shutdown risk: The company's heavy reliance on government funding makes it vulnerable to shutdowns and budget delays. The recent Benzinga article highlighted that shutdown risks and weak outlook overshadowed record profits, pressuring the stock.
- Gross margin pressure: Gross margin fell to 17.3% in Q1 2026 from 18.4% in Q3 2025, indicating cost pressures or contract mix shifts. This could compress operating leverage if not reversed.
- High debt-to-equity ratio of 1.21: Leidos carries a debt-to-equity ratio of 1.21, which is elevated for a services company. Rising interest expenses ($55 million in Q1) could weigh on earnings if rates stay high.
LDOS Technical Analysis
Leidos is currently in a recovery phase after a severe downtrend, with the stock trading at $141.39 as of August 21, 2026, down 21.6% over the past year. The stock is positioned at 41.4% of its 52-week range (between the low of $98.86 and high of $205.77), indicating it remains well below its highs but has rebounded significantly from the lows. This positioning suggests that while the stock has been beaten down, it is showing signs of a potential turnaround, though it has yet to reclaim the upper half of its range, which could indicate lingering bearish sentiment or a value opportunity depending on future catalysts.
Beta
0.55
0.55x market volatility
Max Drawdown
-49.9%
Largest decline past year
52-Week Range
$99-$206
Price range past year
Annual Return
-21.6%
Cumulative gain past year
| Period | LDOS Return | S&P 500 |
|---|---|---|
| 1m | +31.8% | +3.6% |
| 3m | +12.2% | +2.7% |
| 6m | -18.5% | +11.4% |
| 1y | -21.6% | +18.7% |
| ytd | -22.9% | +12.3% |
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LDOS Fundamental Analysis
Leidos reported revenue of $4.4 billion for Q1 2026 (ending April 3, 2026), representing a 3.65% year-over-year increase, though this was a deceleration from the 5.1% growth seen in Q4 2025 and the 6.3% growth in Q3 2025. The company's net income for Q1 was $328 million, with an EPS of $2.60, up from $2.53 in Q4 2025, reflecting strong profitability. However, the revenue growth is slowing, and the company's gross margin of 17.3% in Q1 is slightly below the 18.4% seen in Q3 2025, indicating some margin pressure. The Health segment contributed $1.188 billion in revenue, which is a key driver, but overall growth is being tempered by government budget uncertainties and project timing.
Quarterly Revenue
$4.4B
2026-04
Revenue YoY Growth
+3.6%
YoY Comparison
Gross Margin
17.3%
Latest Quarter
Free Cash Flow
$1.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is LDOS Overvalued?
Given that Leidos has positive net income, the PE ratio is the primary valuation metric. The trailing PE is 16.35x, while the forward PE is 11.06x, indicating that the market expects significant earnings growth, with the forward multiple implying a 32% discount to trailing. This gap suggests that analysts anticipate a substantial increase in earnings, likely driven by margin expansion and cost efficiencies. Compared to the industry average PE of 22x (from valuation data), Leidos trades at a 26% discount, which could be justified by its lower growth rate relative to some tech peers, but also highlights potential undervaluation if the company can sustain its profitability.
PE
16.4x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 12x~21x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include a high debt-to-equity ratio of 1.21, which amplifies interest expense ($55 million in Q1) and could strain cash flow if rates rise. Revenue growth deceleration to 3.65% YoY, down from 6.3% in Q3 2025, signals potential demand softness, while gross margin contraction from 18.4% to 17.3% suggests cost pressures. The company's reliance on government contracts creates lumpy revenue and exposure to budget cycles, as evidenced by the recent revenue miss and cautious guidance.
FAQ
The key risks include: (1) Financial risk from high debt-to-equity of 1.21 and rising interest expenses; (2) Market risk from government shutdowns and budget cuts, which could reduce revenue; (3) Competitive risk from private defense contractors like Saronic; (4) Operational risk from margin compression, as seen in Q1 2026. The most severe risk is a prolonged government shutdown, which could send the stock to its 52-week low of $98.86.
The 12-month forecast is moderately bullish. The base case, with 50% probability, targets $145-$165, aligning with the analyst average of $156.60. The bull case, with 30% probability, targets $180-$225, while the bear case, with 20% probability, targets $100-$125. The most likely scenario is the base case, assuming stable government spending and modest growth.
LDOS is undervalued relative to its peers and its own history. The trailing PE of 16.35x and forward PE of 11.06x are both below the industry average of 22x. The PEG ratio of 0.82 suggests the stock is cheap relative to its growth rate. The market appears to be pricing in low growth expectations, which may be overly pessimistic given the company's record profitability and strong cash flow.
Yes, LDOS is a good buy for investors seeking a defensive, value-oriented stock with a 10.8% upside to the average analyst target of $156.60. The forward PE of 11x is well below the industry average of 22x, and the company generates strong free cash flow of $1.859 billion. However, the stock is not without risks, including government shutdowns and decelerating revenue growth. It is best suited for long-term investors who can tolerate short-term volatility.
LDOS is more suitable for long-term investment due to its defensive characteristics and stable cash flows. The stock has a beta of 0.546, indicating lower volatility than the market, and pays a dividend with a yield of 0.87%. Short-term traders may find opportunities in the current recovery, but the stock's performance is heavily tied to government budget cycles, making it less predictable in the short term. A minimum holding period of 3-5 years is recommended to ride out these cycles.