NYSE:LDOS
Leidos Holdings, Inc.
A premier US-based technology firm delivering essential cybersecurity, aerospace, and intelligence solutions to government and commercial clients.
Key Metrics
Investment Thesis
Bull Case
Investors should consider buying Leidos due to its consistent revenue expansion driven by long-term government contracts that provide stable, predictable cash flows; the company's diversification across defense and commercial markets offers protection against sector-specific downturns; strong balance sheet with $1.11B in cash allows for strategic M&A or share repurchases without dilution.
Bear Case
Concerns persist regarding the concentration of revenue within the US federal government, which faces fiscal headwinds and potential budgetary constraints that could impact future growth rates; high levels of goodwill ($6.34B) and accumulated other comprehensive losses suggest potential impairment risks or volatility in reported equity; elevated operating expenses relative to revenue may compress margins if cost inflation outpaces price increases.
About Leidos Holdings, Inc.
Leidos Holdings provides critical technology solutions to government agencies and commercial sectors across cybersecurity, aerospace, intelligence, and infrastructure markets. The company leverages its deep government relationships and proprietary software platforms to deliver data analytics, mission support, and engineering services. With a diverse portfolio spanning defense contractors and civilian enterprises, Leidos positions itself as a resilient player in high-stakes national security and public sector technology.
Analysis
Management Discussion
Leidos demonstrated robust financial health with operating cash flow reaching $1.75B, significantly exceeding net income due to non-cash adjustments like depreciation and stock-based compensation totaling $671M. Revenue growth accelerated from $14.40B in 2022 to $17.17B by 2026, reflecting successful execution in commercial aerospace and intelligence contracts while maintaining a healthy cash position of $1.20B at year-end.
Industry Overview
The defense technology and government services industry is characterized by long sales cycles, stringent compliance requirements, and a steady demand for cybersecurity and intelligence capabilities amidst rising global geopolitical tensions. Companies in this space must navigate complex procurement processes while adapting to rapid technological shifts in AI and cloud computing to maintain their competitive edge.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|
| Revenue | $14.40B | $15.44B | $16.66B | $17.17B |
| Cost of Revenue | $12.31B | $13.19B | $13.86B | $14.07B |
| Gross Profit | $2.08B | $2.24B | $2.80B | $3.10B |
| Operating Expenses | $996.0M | $1.62B | $971.0M | $990.0M |
| Operating Income | $1.09B | $621.0M | $1.83B | $2.11B |
| R&D | $116.0M | $128.0M | $150.0M | $187.0M |
| G&A | $950.0M | $942.0M | $983.0M | $999.0M |
| Stock-Based Comp | $73.0M | $77.0M | $85.0M | $95.0M |
| D&A | $333.0M | $331.0M | $290.0M | $290.0M |
| Depreciation | $103.0M | $129.0M | $143.0M | $160.0M |
| Amortization | $230.0M | $202.0M | $147.0M | $130.0M |
| Other OpEx | $-70.0M | $553.0M | $-162.0M | $-196.0M |
| Non-Operating Income | $-202.0M | $-218.0M | $-188.0M | $-200.0M |
| Pre-Tax Income | $886.0M | $403.0M | $1.64B | $1.91B |
| Income Tax | $193.0M | $195.0M | $388.0M | $447.0M |
| Continuing Ops | $693.0M | $208.0M | $1.25B | $1.46B |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $693.0M | $208.0M | $1.25B | $1.46B |
| Minority Interest | $8.0M | $9.0M | $-3.0M | $14.0M |
| Net to Common | $685.0M | $199.0M | $1.25B | $1.45B |
| Metric | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|
| Current Assets | $3.64B | $4.00B | $4.43B | $4.81B |
| Cash & Equivalents | $516.0M | $777.0M | $943.0M | $1.11B |
| Accounts Receivable | $2.35B | $2.43B | $2.65B | $2.71B |
| Inventory | $287.0M | $310.0M | $315.0M | $342.0M |
| Other Current Assets | $490.0M | $489.0M | $525.0M | $656.0M |
| Long-Term Assets | $9.43B | $8.69B | $8.68B | $8.68B |
| Intangibles | $952.0M | $667.0M | $517.0M | $458.0M |
| Goodwill | $6.70B | $6.11B | $6.08B | $6.34B |
| Operating Leases | $545.0M | $512.0M | $560.0M | $526.0M |
| Other LT Assets | $1.22B | $1.40B | $1.51B | $1.35B |
| Total Assets | $13.07B | $12.70B | $13.10B | $13.49B |
| Current Liabilities | $3.95B | $2.99B | $3.65B | $2.83B |
| Accounts Payable | $733.0M | $736.0M | $705.0M | $627.0M |
| Current Leases | $130.0M | $136.0M | $123.0M | $107.0M |
| Deferred Revenue | $380.0M | $442.0M | $333.0M | $348.0M |
| Other Current Liab | $1.93B | $850.0M | $1.61B | $1.01B |
| Long-Term Liabilities | $4.77B | $5.45B | $4.99B | $5.70B |
| LT Operating Leases | $570.0M | $516.0M | $621.0M | $587.0M |
| Other LT Liab | $4.17B | $4.91B | $4.36B | $5.11B |
| Total Liabilities | $8.72B | $8.44B | $8.64B | $8.53B |
| Shareholders' Equity | $4.35B | $4.26B | $4.46B | $4.96B |
| Paid-In Capital | $2.00B | $1.89B | $1.11B | $319.0M |
| Retained Earnings | $2.37B | $2.36B | $3.41B | $4.65B |
| AOCI | $-73.0M | $-48.0M | $-110.0M | $-50.0M |
| Total L&E | $13.07B | $12.70B | $13.10B | $13.49B |
| Metric | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|
| Net Income (CFO) | $693.0M | $208.0M | $1.25B | $1.46B |
| Non-Cash Adjustments | $-176.0M | $1.20B | $-76.0M | $671.0M |
| Working Capital Changes | $469.0M | $-238.0M | $217.0M | $-383.0M |
| Cash from Operations | $986.0M | $1.17B | $1.39B | $1.75B |
| Cash from Investing | $-313.0M | $-211.0M | $-142.0M | $-405.0M |
| Share Buybacks | $0 | $225.0M | $850.0M | $400.0M |
| Cash from Financing | $-865.0M | $-715.0M | $-1.08B | $-1.15B |
| FX Effect | $0 | $6.0M | $-10.0M | $13.0M |
| Net Change in Cash | $-192.0M | $245.0M | $156.0M | $213.0M |
| Beginning Cash | $875.0M | $683.0M | $928.0M | $991.0M |
| Ending Cash | $683.0M | $928.0M | $1.08B | $1.20B |
Frequently Asked Questions
How does Leidos Holdings, Inc. make money?
The company operates through four primary segments: Intelligence & Mission Support (providing data analytics and mission planning for defense), Technology Solutions (offering software and IT services to federal agencies), Commercial Aerospace (engineering and manufacturing for the space and aviation industries), and Government Services (delivering logistics, engineering, and facility management).
What are the main risks for LDOS?
Heavy dependence on US federal government spending makes the company vulnerable to budget cuts, policy shifts, or delayed appropriations; complex supply chain dependencies for aerospace components could disrupt revenue recognition; cybersecurity threats targeting government networks pose significant operational and reputational risks; prolonged periods of high interest rates may impact commercial project financing and margin compression.
What is LDOS's competitive advantage?
First-mover advantage in niche government contracts creates high switching costs and recurring revenue streams; strong proprietary IP in cybersecurity and data analytics platforms provides a durable moat against competitors; diversified customer base across federal agencies and commercial sectors mitigates reliance on single-source funding.
Related Companies
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.