Updated 5/28/25
Leidos Holdings, Inc. operates at the intersection of defense, technology, and government services, generating over $16 billion in annual revenue with clients that include major U.S. federal agencies. Backed by consistent earnings, a growing backlog, and a low beta, it offers stability with a forward-looking growth strategy. The company’s focus spans cyber operations, digital modernization, energy infrastructure, and national security, aligning closely with current government spending priorities.
Recent Events
Leidos recently posted earnings that came in better than expected. EPS grew nearly 28% year-over-year, with revenue up 6.8% over the same stretch. These aren’t blockbuster numbers, but they show steady, dependable progress—exactly the kind of momentum long-term investors appreciate.
Margins are solid, too. Operating margin is running at 12.4%, and profit margin is close to 8%, which is strong considering the cost pressures facing many companies right now. While other firms are trying to defend their bottom lines, Leidos is quietly expanding its profitability.
The stock itself has been relatively tame, bouncing between $123 and $203 in the past year. It currently trades around $151, which might not seem exciting on the surface. But its beta sits at just 0.66, meaning it moves less than the market—a reassuring trait for income-focused investors who prioritize capital preservation alongside dividends.
Key Dividend Metrics
📈 Forward Yield: 1.05%
💵 Annual Dividend (Forward): $1.60
📆 Next Dividend Date: June 30, 2025
🧮 Payout Ratio: 15.7%
🔁 5-Year Average Yield: 1.34%
🔒 Cash Flow Coverage: Healthy, with $921 million in levered free cash flow
📉 Debt Load: Elevated at 133% debt/equity, but under control
Looking at the numbers, the headline yield doesn’t immediately jump out. But when you dig deeper, there’s a lot to like. The low payout ratio and strong free cash flow tell the story of a dividend that’s not just safe, but comfortably funded. There’s breathing room here—lots of it.
Dividend Overview
At first glance, a 1.05% yield might feel underwhelming, especially compared to some of the more generous dividend payers out there. But it’s not just about size—it’s about sustainability. And this is where Leidos stands out.
They’re paying out less than 16% of their earnings, which gives them a ton of flexibility. That means the dividend isn’t at risk in a downturn and could continue to grow without requiring heroic earnings increases. The company’s balance sheet shows $845 million in cash and plenty of room in their free cash flow to support those payouts.
They’ve also been steady in how they approach dividend growth. No sudden jumps, no flashy announcements—just consistent, disciplined capital returns. That kind of predictability is appealing, especially in sectors where earnings can be more cyclical.
Another plus for those looking to time their entry: the next dividend lands on June 30, with an ex-dividend date of June 16. So if you’re watching the calendar, those are two dates to keep in mind.
Dividend Growth and Safety
Leidos isn’t chasing headlines with its dividend, but it’s quietly building a strong track record. The current yield is slightly below the 5-year average of 1.34%, which could mean the stock has had a bit of a run and the price appreciation has pushed the yield down. Not a bad thing—it usually signals that the market sees value in the business.
The company’s payout strategy is where things really get interesting. A payout ratio below 16% is conservative by any standard. What that says is this dividend isn’t just being paid—it’s being paid easily, with plenty of headroom.
Debt is definitely something to watch, sitting at 133% debt-to-equity. But in Leidos’ case, that needs context. This is a business with dependable cash flows and long-term contracts backed by the federal government. Those revenues are more predictable than most. And when you’re pulling in over $1.3 billion in operating cash flow, the debt is less intimidating.
They’re managing it well, too. Instead of using debt to fund unsustainable dividend hikes or excessive buybacks, Leidos is sticking to a measured approach. That shows discipline, and for dividend investors, that’s a huge positive.
There’s also the comfort of knowing these dividends are backed by real earnings growth. The company posted EPS of $9.92 over the past year, giving plenty of room to continue growing the dividend without cutting into core operations or stretching their balance sheet.
In short, Leidos isn’t the flashiest name out there—but for investors who value consistency, reliability, and room for steady growth, it checks a lot of boxes.
Cash Flow Statement
Leidos has delivered a strong showing on the cash flow front over the trailing twelve months, with operating cash flow reaching $1.34 billion. That kind of internal cash generation offers stability and helps fund key priorities like dividends, debt servicing, and reinvestment in the business. More importantly, it signals that Leidos isn’t reliant on external capital to sustain its operations, even with the sizable debt on its books.
The company’s levered free cash flow came in at $921.6 million, highlighting how much actual cash is left after covering capital expenditures and interest payments. This is a healthy figure for a firm of its size and supports both dividend coverage and potential debt reduction if management chooses to lean that way. For investors watching cash flow closely, this kind of consistency is a positive sign of operational discipline.
Analyst Ratings
🟡 Leidos Holdings (NYSE: LDOS) has recently seen a shift in analyst sentiment. On May 27, 2025, Baird downgraded the stock from “Outperform” to “Neutral,” setting a revised price target of $163.00. This move stemmed from concerns surrounding a softer bookings environment and looming pressures in the government services sector. While the company posted strong Q1 results—including an adjusted EPS of $2.97 and revenue of $4.25 billion—the bookings-to-bill ratio came in at just 0.5x, which raised some red flags about future growth momentum.
📈 On the flip side, other analysts remain more optimistic. Wells Fargo lifted its price target to $200.00, reflecting confidence in the company’s underlying financial strength. RBC Capital followed with a target increase to $160.00, while UBS adjusted its own figure to $168.00. These updates suggest that while some are cautious, there’s still a prevailing belief in Leidos’ long-term potential and resilience.
🧭 The broader consensus rating for LDOS sits at a “Moderate Buy,” with the average price target currently at $176.46. This shows a market view that’s balanced—acknowledging recent challenges while still seeing value and stability in the company’s core operations.
Earnings Report Summary
Leidos kicked off fiscal 2025 with a solid performance that checked a lot of boxes for investors. The company reported $4.25 billion in revenue for the first quarter, which came in 7% higher than the same time last year. That growth wasn’t tied to just one part of the business either—demand was strong across national security, health, and commercial segments. Net income came in at $365 million, up 29% from the year before, and earnings per share climbed to $2.77. The results showed a business not just maintaining its footing, but building momentum.
Strong Margins and Backlog
Profitability improved too. Leidos posted adjusted EBITDA of $601 million, which was a 23% jump year-over-year. That worked out to a margin of 14.2%, up from last year’s levels and a reflection of strong cost management and a favorable mix of business. The backlog remains impressive, totaling $46.3 billion, with $7.3 billion of that already funded. In other words, the pipeline is healthy, and management expects steady work ahead.
CEO Insights and Strategy
Thomas Bell, the company’s CEO, spoke confidently about where things are headed. He pointed to the company’s NorthStar 2030 strategy as a roadmap for long-term growth. That plan includes five major focus areas: space and maritime systems, energy infrastructure, digital modernization and cyber, customized critical mission software, and managed health services. Bell made it clear that these areas aren’t just corporate buzzwords—they match up with national priorities and customer demand, which gives them staying power.
Strategic Moves and Segment Highlights
The company also made a notable move to expand its cyber capabilities. Leidos agreed to acquire a specialized firm in the cyber defense and offense space for about $300 million. That deal is expected to wrap up in the second quarter and should strengthen their position in one of the most critical areas of modern defense and security.
Across business segments, things are trending well. National security and digital revenues hit $1.88 billion, up 5% from the prior year. Health and civil grew 8% to $1.29 billion, thanks in part to gains in managed health services. The defense systems segment posted a 7% increase, and the commercial and international unit had one of the biggest jumps, climbing 12% to $568 million.
Capital Allocation and Outlook
On the capital front, Leidos put $500 million toward an accelerated share repurchase program during the quarter—a signal of confidence from leadership. They also reaffirmed their full-year outlook, guiding for $16.9 to $17.3 billion in revenue and adjusted EBITDA margins in the mid-to-high 12% range. The tone from the top was focused and upbeat, pointing toward strategic growth while maintaining a strong balance between investment and shareholder returns.
Management Team
The leadership team at Leidos is a significant part of what makes the company tick. CEO Thomas Bell, who stepped into the role with deep experience in aerospace and defense, has brought a sharper strategic focus to the business. His emphasis on growth pillars that align with national security priorities isn’t just smart—it’s timely. He’s been steering the company toward high-value, high-demand sectors like cyber, energy infrastructure, and digital modernization, and so far, the execution looks strong.
Bell’s background has helped shape a forward-thinking culture within the company, one that’s operationally disciplined but not afraid to invest in innovation. The rest of the executive bench carries similar credentials. There’s a mix of long-time Leidos veterans and seasoned professionals from across the defense and tech industries. Together, they’ve built a structure that encourages agility while maintaining strong oversight—especially critical in a space where government contracts and performance metrics go hand-in-hand.
Their recent focus on operational efficiency, stronger margin performance, and cash flow discipline is evident in the numbers. And it’s also worth noting that employee retention and talent development have become higher priorities, reflecting a broader push to strengthen the company’s internal bench and leadership pipeline.
Valuation and Stock Performance
Leidos stock has experienced a steady climb over the past year, trading in a range between $123 and $203. As of now, it’s sitting around $151.70. While not at its highs, the stock is well off its lows, reflecting improved investor sentiment and consistent financial results. The company’s 5-year beta of 0.66 tells us this is a relatively stable equity—less volatile than the broader market—which appeals to conservative investors looking for steady growth without excessive drama.
The valuation picture looks reasonable at current levels. The stock trades at a forward price-to-earnings ratio of about 14.2, which is fair for a company with strong earnings momentum and predictable cash flow. The trailing P/E sits around 15.4, suggesting the market isn’t pricing in aggressive future growth, but also not discounting the stock either. When compared to peers in the defense and government services space, this is a company that’s attractively valued relative to its growth rate and cash generation.
On a price-to-sales basis, Leidos trades at 1.21, which is modest given the scale and stability of its revenue. And its enterprise value to EBITDA ratio is under 11, pointing to healthy earnings relative to the overall valuation of the business. The stock doesn’t scream cheap, but it does suggest you’re getting a high-quality operator with reliable margins and strong contract visibility at a fair price.
Risks and Considerations
As with any investment, there are a few things to keep in mind. First, Leidos is heavily exposed to government spending cycles. While contracts tend to be long-term and predictable, shifts in federal budgets—especially in defense and healthcare—can impact the pipeline. The company’s broad exposure across different government agencies helps mitigate this risk somewhat, but it doesn’t eliminate it.
Another factor is debt. Leidos currently holds a total debt load of around $5.74 billion, and the debt-to-equity ratio is over 130 percent. While cash flow coverage is strong and interest payments are manageable, it’s still something to watch if interest rates stay elevated or if earnings take a temporary dip. High leverage isn’t uncommon in this space, but it does add another layer of complexity.
There’s also execution risk in areas like mergers and acquisitions. Leidos is growing through strategic deals, such as its recent cyber acquisition. While these moves can strengthen capabilities and open new revenue channels, they also come with integration challenges and the need to maintain cultural alignment.
Competition is another long-term consideration. As government agencies modernize, they’re increasingly looking for partners who can offer end-to-end digital solutions. Leidos is well-positioned here, but it’s not the only player in this space. Firms like Booz Allen Hamilton, Raytheon Technologies, and Accenture all have overlapping capabilities, and the race for top-tier contracts can be fierce.
Final Thoughts
Leidos sits at the intersection of stability and innovation. It’s not just a defense contractor—it’s a company using advanced tech to solve some of the most critical challenges facing government clients. Whether it’s managing energy infrastructure, modernizing military systems, or expanding managed health services, Leidos is involved in the parts of government that tend to get funded even when the budget gets tight.
Its dividend is modest but reliable, backed by low payout ratios and strong cash generation. Leadership is thoughtful, focused, and aligned with long-term value creation. The stock itself doesn’t offer explosive upside, but that’s not really the point. What it offers is consistency, which is something dividend investors and long-term holders often value most.
The company isn’t without its challenges. High leverage, competition, and dependency on government contracts all pose risks. But those risks are balanced by a backlog that stretches out for years, a disciplined approach to capital allocation, and a clear strategic plan that’s already starting to bear fruit.
For investors looking for a company that blends financial reliability with long-term strategic positioning, Leidos makes a compelling case. It may not be the loudest name on the board, but it’s one that continues to quietly deliver.