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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on LDOS

Leidos Holdings' recent performance was driven by strong Q3 earnings, with EPS of $2.82 beating estimates and revenue surpassing expectations at $4.5 billion, a 7% year-over-year increase. The company's defense and tech demand outlook remains positive, leading to a raised 2025 profit forecast. Its solid ROE and growing backlog also position it as a compelling buy. Additionally, Leidos' latest earnings beat and higher guidance have sparked investor interest, with a growing retail interest in defense stocks further fueling its upside run.

1.c. Company Highlights

2. Leidos' Q3 2025 Earnings: A Strong Performance Amidst Government Shutdown Headwinds

Leidos reported a robust third-quarter 2025 earnings, with revenues growing 7% year-over-year to $4.47 billion, adjusted EBITDA of $616 million, up 3% year-over-year, and a margin of 13.8%. Non-GAAP diluted EPS grew 4% to $3.05, beating analyst estimates of $2.61. The company's financial performance has been strong, with revenue growth of 5%, EBITDA growth of 13%, and EPS growth of 18% so far in 2025. As CFO Chris Cage highlighted, the strong financial performance is a testament to the company's ability to navigate government efficiency imperatives and a potential 3-month shutdown.

Publication Date: Nov -09

📋 Highlights
  • Strong Q3 Performance:: Revenue up 7% YoY to $4.47B, adjusted EBITDA margin at 13.8%, and operating cash flow of $711M despite government shutdown headwinds.
  • Guidance Raised Twice in 2025:: Revenue guidance affirmed at $17B–$17.25B, adjusted EBITDA margin guidance lifted to high 13s, non-GAAP EPS raised to $11.45–$11.75 (midpoint +$0.30).
  • High-Growth Defense Programs:: Defense Systems eyeing $15B in value over 5 years from 10 franchise programs, including counter-UAS and maritime systems, with a $0.5B recompeted counterterrorism contract.
  • Robust Pipeline & Backlog:: $69B near-term opportunities, $24B in submitted bids, and 27% sequential funded backlog increase, including 24 mobile VACIS systems order.
  • Capital Returns & Dividend Hike:: $100M share repurchases, $450M term loan payoff, and 7.5% dividend increase to $0.43/share, supported by $711M operating cash flow and strong free cash flow potential.

Business Segment Performance

The Defense Systems business is a high grower, with a potential $15 billion in value over 5 years from 10 franchise programs, including air and base defense systems and counter-UAS systems. The Health & Civil segment has expanded margins, driven by innovation and investment in quality and efficiency of care. The company's pipeline of near-term opportunities stands at $69 billion, including $24 billion of bids awaiting adjudication.

Valuation and Growth Prospects

Leidos' valuation metrics indicate a reasonable price for its growth prospects. The company's P/E Ratio stands at 17.93, EV/EBITDA at 12.52, and ROE at 30.81%. Analysts estimate next year's revenue growth at 5.0%. The company's strong balance sheet and powerful free cash flow provide multiple pathways to continue growing shareholder value, with a Free Cash Flow Yield of 5.5%.

Capital Deployment and M&A Strategy

Leidos has repurchased $100 million worth of shares and accelerated the payoff of $450 million on its term loan. The company has also increased its quarterly dividend by 7.5% to $0.43 per share. Leidos has a defined growth strategy, NorthStar 2030, and will focus on inorganic growth in specific areas, being judicious and prudent in deploying capital.

Guidance and Outlook

Leidos has reaffirmed its revenue guidance of $17 billion to $17.25 billion and raised its adjusted EBITDA margin guidance to high 13s. The company has also raised its non-GAAP diluted EPS guidance by $0.30 at the midpoint to $11.45 to $11.75. The guidance reflects the company's confidence in its ability to navigate the current environment and deliver strong financial performance.

3. NewsRoom

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Leidos to continue as program administrator for Hawai'i Energy

Dec -04

Source: prnewswire.com

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Leidos Holdings, Inc. (LDOS) Presents at Goldman Sachs Industrials and Materials Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

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LDOS or EXLS: Which Is the Better Value Stock Right Now?

Dec -02

Source: zacks.com

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Is Leidos (LDOS) Outperforming Other Computer and Technology Stocks This Year?

Dec -02

Source: zacks.com

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Leidos explosive trace detection system achieves latest EU security standard

Dec -02

Source: prnewswire.com

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Leidos (LDOS) Upgraded to Buy: What Does It Mean for the Stock?

Dec -01

Source: zacks.com

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BigBear.ai vs. Leidos: Which Defense-Focused AI Stock Should You Buy?

Nov -27

Source: zacks.com

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Boston Partners Purchases 103,321 Shares of Leidos Holdings, Inc. $LDOS

Nov -26

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.33%)

6. Segments

Defense Solutions

Expected Growth: 5%

Leidos Holdings' Defense Solutions segment growth is driven by increasing demand for cybersecurity, intelligence, and logistics services from the US Department of Defense and other government agencies. The company's expertise in digital modernization, cloud computing, and artificial intelligence also supports growth. Additionally, Leidos' strategic acquisitions and partnerships expand its capabilities and customer base, contributing to the 5% growth rate.

Civil

Expected Growth: 3%

Civil segment's 3% growth is driven by increasing demand for infrastructure development, government investments in transportation and energy projects, and Leidos' expertise in environmental and engineering services. Additionally, the company's strategic acquisitions and partnerships have expanded its capabilities, enabling it to capitalize on emerging trends in sustainability and digital transformation.

Health

Expected Growth: 4%

Leidos Holdings' Health segment growth is driven by increasing demand for healthcare IT services, expansion of existing contracts, and strategic acquisitions. The company's focus on digital transformation, cybersecurity, and data analytics also contributes to growth. Additionally, the COVID-19 pandemic has accelerated the adoption of telehealth and virtual care, further boosting demand for Leidos' health services.

7. Detailed Products

Defense Solutions

Leidos provides a range of defense solutions, including cybersecurity, logistics, and supply chain management, to support the U.S. Department of Defense and other government agencies.

Civil Government Solutions

Leidos offers a range of solutions for civil government agencies, including IT modernization, cybersecurity, and data analytics.

Health Solutions

Leidos provides healthcare and life sciences solutions, including research and development, clinical trials management, and health IT services.

Intelligence Solutions

Leidos offers intelligence solutions, including data analytics, cybersecurity, and intelligence analysis, to support national security and law enforcement agencies.

Cyber Solutions

Leidos provides cybersecurity solutions, including threat detection, incident response, and penetration testing, to protect government and commercial organizations from cyber threats.

Engineering Solutions

Leidos offers engineering solutions, including systems engineering, integration, and testing, to support government and commercial clients.

8. Leidos Holdings, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Leidos Holdings, Inc. is medium due to the presence of alternative solutions and services in the defense, intelligence, and civil markets.

Bargaining Power Of Customers

The bargaining power of customers for Leidos Holdings, Inc. is low due to the company's strong relationships with its customers and the lack of buyer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Leidos Holdings, Inc. is medium due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for Leidos Holdings, Inc. is low due to the high barriers to entry in the defense and intelligence markets, including the need for specialized expertise and security clearances.

Intensity Of Rivalry

The intensity of rivalry for Leidos Holdings, Inc. is high due to the presence of several large and established competitors in the defense, intelligence, and civil markets.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 55.30%
Debt Cost 7.25%
Equity Weight 44.70%
Equity Cost 7.25%
WACC 7.25%
Leverage 123.73%

11. Quality Control: Leidos Holdings, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Leidos

A-Score: 5.7/10

Value: 4.3

Growth: 6.7

Quality: 5.9

Yield: 2.0

Momentum: 7.0

Volatility: 8.3

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Dolby Laboratories

A-Score: 5.3/10

Value: 3.4

Growth: 4.2

Quality: 8.5

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

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Jack Henry

A-Score: 5.0/10

Value: 2.7

Growth: 5.7

Quality: 7.4

Yield: 3.0

Momentum: 1.5

Volatility: 10.0

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SAIC

A-Score: 4.8/10

Value: 6.8

Growth: 5.4

Quality: 6.4

Yield: 3.0

Momentum: 0.5

Volatility: 6.7

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CACI

A-Score: 4.5/10

Value: 3.7

Growth: 6.4

Quality: 5.1

Yield: 0.0

Momentum: 4.5

Volatility: 7.0

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ASGN

A-Score: 4.1/10

Value: 7.6

Growth: 6.2

Quality: 5.2

Yield: 0.0

Momentum: 0.0

Volatility: 5.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

192.42$

Current Price

192.42$

Potential

-0.00%

Expected Cash-Flows