Leidos (NYSE:LDOS) Posts Earnings Results, Beats Estimates By $0.35 EPS

Key Points

• Leidos beat quarterly earnings expectations: Adjusted EPS was $3.26, exceeding the $2.91 consensus, while revenue increased 7.2% year over year to approximately $4.6 billion.
• Full-year 2026 guidance was raised: Revenue guidance increased to $18.2 billion–$18.4 billion, and EPS guidance was set at $12.20–$12.50, supported by strong defense demand, bookings and cash generation.
• Risks remain in the Health segment: The VA’s suspension of incentive payments for medical disability examination vendors is expected to weigh on near-term results, though Leidos reported record operating cash flow and reduced leverage.

Leidos (NYSE:LDOS - Get Free Report) announced its quarterly earnings data on Tuesday. The aerospace company reported $3.26 EPS for the quarter, topping analysts' consensus estimates of $2.91 by $0.35, Zacks reports. Leidos had a return on equity of 31.92% and a net margin of 8.15%.During the same quarter in the prior year, the firm earned $3.21 earnings per share. The business's quarterly revenue was up 7.2% on a year-over-year basis. Leidos updated its FY 2026 guidance to 12.200-12.500 EPS.

Here are the key takeaways from Leidos' conference call:

• Leidos raised its 2026 guidance, increasing the revenue midpoint by $100 million, EPS midpoint by $0.05, and operating cash flow outlook by $50 million, supported by stronger year-to-date performance.
• Defense momentum accelerated, with 6% organic revenue growth and a 2.2 book-to-bill ratio in the quarter; management highlighted expanding opportunities in munitions, counter-drone systems, maritime autonomy, and space-based missile-warning payloads.
• The company reported record second-quarter operating cash flow of $793 million and free cash flow of $761 million, while reducing leverage to 2.5x and lowering expected 2026 capital expenditures to about $250 million.
• The VA suspended incentive payments for all medical disability examination vendors through the end of 2026, creating a near-term headwind for Health; the business is expected to run around second-quarter revenue levels for the rest of the year, with longer-term economics dependent on an upcoming recompete.
• Leidos expects a continuing resolution to create potential timing risk for Intel and Digital awards, although management said customer procurement activity is accelerating and cited a $23 billion proposal pipeline awaiting adjudication.

Leidos Stock Performance

NYSE:LDOS traded up $10.40 during trading hours on Tuesday, reaching $129.12. 790,296 shares of the company's stock were exchanged, compared to its average volume of 1,301,232. Leidos has a 1-year low of $98.86 and a 1-year high of $205.77. The company has a quick ratio of 1.29, a current ratio of 1.40 and a debt-to-equity ratio of 1.19. The firm has a market capitalization of $16.24 billion, a price-to-earnings ratio of 11.81, a P/E/G ratio of 1.69 and a beta of 0.54. The company has a 50-day moving average of $113.23 and a 200 day moving average of $145.90.

Leidos Announces Dividend

The firm also recently announced a quarterly dividend, which will be paid on Wednesday, September 30th. Stockholders of record on Tuesday, September 15th will be issued a $0.43 dividend. This represents a $1.72 dividend on an annualized basis and a dividend yield of 1.3%. The ex-dividend date of this dividend is Tuesday, September 15th. Leidos's payout ratio is presently 15.75%.

Key Stories Impacting Leidos

Here are the key news stories impacting Leidos this week:

• Positive Sentiment: Q2 earnings beat expectations: Non-GAAP EPS was $3.26, above the $2.91 consensus estimate and up from $3.21 a year earlier. Revenue rose 7% year over year to approximately $4.6 billion, also exceeding expectations. Leidos Q2 Earnings and Revenues Top Estimates
• Positive Sentiment: Full-year revenue guidance improved: Leidos raised its fiscal 2026 revenue outlook to $18.2 billion-$18.4 billion from $18.0 billion-$18.4 billion. The EPS outlook remains $12.20-$12.50, with the midpoint slightly above the approximately $12.31 analyst consensus. Leidos Delivers Strong Second Quarter and Enhances Full-Year Guidance
• Positive Sentiment: Strong cash generation and backlog support visibility: Operating cash flow was $793 million, free cash flow was $761 million, and quarterly net bookings totaled $4.9 billion. Backlog reached $48.7 billion, including $10.2 billion funded, while the 1.1 book-to-bill ratio indicates bookings exceeded revenue. Leidos Q2 Revenue Rises 7 Percent
• Positive Sentiment: Additional defense-related contract momentum: Leidos was selected to supply infrared sensors and mission support for Sierra Space’s missile-defense satellites and received a U.S. Navy intelligence modernization contract worth up to $64.8 million. Leidos Selected for Missile Defense Satellites
• Neutral Sentiment: Dividend maintained: Leidos declared a quarterly dividend of $0.43 per share, payable September 30 to shareholders of record September 15.
• Negative Sentiment: GAAP profitability declined: Reported net income fell to $356 million from $393 million a year earlier, while net margin decreased to 7.8% from 9.2%. This contrasts with the adjusted EPS growth and may keep investors focused on cost pressures and earnings quality.

Leidos announced that its board has approved a stock repurchase plan on Friday, July 31st that allows the company to repurchase 20,000,000 shares. This repurchase authorization allows the aerospace company to reacquire shares of its stock through open market purchases. Stock repurchase plans are generally an indication that the company's board of directors believes its shares are undervalued.

Insider Buying and Selling at Leidos

In related news, Director Gary Stephen May sold 1,484 shares of the firm's stock in a transaction dated Thursday, May 7th. The stock was sold at an average price of $132.75, for a total transaction of $197,001.00. Following the transaction, the director owned 10,137 shares of the company's stock, valued at $1,345,686.75. This trade represents a 12.77% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available through this link. Company insiders own 0.77% of the company's stock.

Institutional Investors Weigh In On Leidos

Large investors have recently modified their holdings of the stock. Compound Planning Inc. lifted its stake in shares of Leidos by 4.7% in the 4th quarter. Compound Planning Inc. now owns 2,482 shares of the aerospace company's stock worth $448,000 after acquiring an additional 112 shares during the period. Corient Private Wealth LLC boosted its holdings in Leidos by 426.7% in the 4th quarter. Corient Private Wealth LLC now owns 323,828 shares of the aerospace company's stock valued at $58,419,000 after purchasing an additional 262,343 shares in the last quarter. Mercer Global Advisors Inc. ADV increased its position in Leidos by 8.9% during the 4th quarter. Mercer Global Advisors Inc. ADV now owns 132,116 shares of the aerospace company's stock worth $23,834,000 after purchasing an additional 10,796 shares during the period. First Citizens Bank & Trust Co. raised its stake in shares of Leidos by 2.2% during the 4th quarter. First Citizens Bank & Trust Co. now owns 57,651 shares of the aerospace company's stock worth $10,400,000 after buying an additional 1,261 shares in the last quarter. Finally, EP Wealth Advisors LLC acquired a new stake in shares of Leidos in the 4th quarter valued at approximately $3,341,000. Hedge funds and other institutional investors own 76.12% of the company's stock.

Wall Street Analyst Weigh In

A number of equities research analysts have commented on the stock. Wall Street Zen raised shares of Leidos from a "hold" rating to a "buy" rating in a research report on Thursday, July 16th. Citigroup cut their price target on Leidos from $178.00 to $138.00 and set a "buy" rating on the stock in a research note on Wednesday, July 1st. TD Cowen lowered their price objective on Leidos from $160.00 to $115.00 and set a "hold" rating for the company in a research report on Tuesday, July 7th. Royal Bank Of Canada cut their target price on Leidos from $215.00 to $180.00 and set an "outperform" rating on the stock in a research report on Wednesday, May 6th. Finally, Wells Fargo & Company set a $125.00 price target on Leidos in a report on Wednesday, June 17th. One analyst has rated the stock with a Strong Buy rating, six have issued a Buy rating and ten have assigned a Hold rating to the company's stock. According to data from MarketBeat.com, the company has an average rating of "Hold" and a consensus price target of $163.80.

About Leidos

Leidos is an American technology and engineering company that provides services and solutions to government and commercial customers, with a strong focus on national security, defense, intelligence, and civil government markets. The company delivers systems integration, engineering, cybersecurity, software development, data analytics, cloud migration and managed IT services, as well as mission support for complex programs. Leidos' work spans areas such as C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance), secure communications, sensors and systems engineering, and health IT solutions for public-sector healthcare programs.

Leidos traces its corporate roots to Science Applications International Corporation (SAIC) and emerged as an independent, publicly traded company following a corporate separation in 2013.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.