Leidos (NYSE:LDOS) Announces Quarterly Earnings Results, Beats Expectations By $0.58 EPS

Leidos (NYSE:LDOS) released its quarterly earnings data on Tuesday. The aerospace company reported $3.62 EPS for the quarter, topping the consensus estimate of $3.04 by $0.58, Zacks reports. Leidos had a return on equity of 30.81% and a net margin of 7.80%. The company had revenue of $4.63 billion during the quarter, compared to the consensus estimate of $4.71 billion. During the same period last year, the company earned $3.05 EPS. Leidos’s revenue for the quarter 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 Trading Down 7.1%

LDOS stock opened at $133.98 on Wednesday. The company has a debt-to-equity ratio of 1.13, a current ratio of 1.63 and a quick ratio of 1.60. Leidos has a 1-year low of $98.86 and a 1-year high of $205.77. The business has a 50 day simple moving average of $129.29 and a two-hundred day simple moving average of $141.06. The company has a market capitalization of $16.81 billion, a price-to-earnings ratio of 11.82, a PEG ratio of 1.60 and a beta of 0.55.

Leidos Increases Dividend

The firm also recently declared a quarterly dividend, which will be paid on Thursday, December 31st. Investors of record on Tuesday, December 15th will be issued a $0.45 dividend. The ex-dividend date of this dividend is Tuesday, December 15th. This represents a $1.80 dividend on an annualized basis and a yield of 1.3%. This is a boost from Leidos’s previous quarterly dividend of $0.43. Leidos’s payout ratio is presently 16.04%.

Insider Activity at Leidos

In other news, Director Noel Geer sold 10,000 shares of the business’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 owned 34,274 shares of the company’s stock, valued at approximately $4,820,980.84. The trade was a 22.59% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, Director Gary May sold 1,000 shares of the firm’s stock in a transaction on Tuesday, September 1st. The shares were sold at an average price of $140.85, for a total transaction of $140,850.00. Following the transaction, the director directly owned 10,204 shares of the company’s stock, valued at $1,437,233.40. The trade was a 8.93% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Company insiders own 0.77% of the company’s stock.

Wall Street Analyst Weigh In

LDOS has been the topic of several research analyst reports. Weiss Ratings raised Leidos from a “hold (c)” rating to a “hold (c+)” rating in a report on Thursday, October 22nd. Bank of America increased their target price on Leidos from $125.00 to $135.00 and gave the company a “neutral” rating in a report on Friday, September 18th. Truist Financial decreased their price target on shares of Leidos from $195.00 to $160.00 and set a “buy” rating on the stock in a research report on Friday, July 10th. TD Cowen cut their price objective on shares of Leidos from $135.00 to $130.00 and set a “hold” rating for the company in a research report on Tuesday, October 6th. Finally, Wells Fargo & Company set a $165.00 price objective on Leidos in a research note on Monday, August 17th. One analyst has rated the stock with a Strong Buy rating, four have issued a Buy rating and ten have given a Hold rating to the stock. According to MarketBeat, Leidos has an average rating of “Hold” and a consensus price target of $150.85.

More Leidos News

Here are the key news stories impacting Leidos this week:

• Positive Sentiment: Adjusted Q3 earnings were $3.62 per share, ahead of the $3.04 consensus and up 19% year over year. Leidos also reported $476 million in adjusted free cash flow and raised its full-year EPS and cash-flow guidance. Leidos’ Q3 Earnings Beat Estimates, Revenues Miss, ’26 EPS View Raised
• Positive Sentiment: Leidos is mobilizing suppliers to prepare for large-scale production of its low-cost containerized and Havoc Spear cruise missiles, creating potential longer-term growth opportunities tied to defense demand. Leidos mobilizes supply chain to scale production of thousands of U.S. cruise missiles
• Neutral Sentiment: The company announced a 4.7% increase in its quarterly dividend, to $0.45 per share. Leidos dividend announcement
• Negative Sentiment: Q3 revenue of $4.63 billion missed analysts’ $4.71 billion estimate, and Leidos cut its sales outlook for 2026. The revenue shortfall and softer sales forecast may have outweighed the earnings and cash-flow beats for investors. Leidos’ Q3 Earnings Beat Estimates, Revenues Miss, ’26 EPS View Raised

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

About Leidos

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.