Leidos Holdings (LDOS) Posts Q2 2025 Earnings — Is It Time to Go Long?

Formed from one of the biggest mergers ever to take place in the defense sector, Leidos Holdings (NYSE: LDOS) is one of the industry’s leading IT services providers.

Size is an advantage — but on its own, it isn’t enough to warrant investing in a stock. However, there are plenty of good reasons as to why you should keep your focus on LDOS.

First, let’s set the stage. The company has beaten earnings estimates for eight consecutive quarters. With the exception of one quarter, each of these earnings calls saw double-digit earnings per share (EPS) growth.

In contrast with those impressive results, the stock hasn’t seen much upward momentum as of late. On a year-to-date (YTD) basis, LDOS is up by 12.39% — moreover, the stock is only up by 10.32% compared to this time last year.

I think that this pattern of sluggish returns is about to end for Leidos Holdings. To explain why, let’s first take a look at the bigger picture.

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When we evaluate a stock, we use our quant rating system, Zen Ratings. It tracks roughly 4,600 stocks, and sizes up how those stocks stack up against each other on the basis of 115 proprietary factors.

At the moment, LDOS ranks in the top 4% of the equities we track. The stocks that fall into the top 5% are given a Zen Rating of A — which has historically corresponded to an average yearly gain of 32.52%.

I strongly believe LDOS could get an upgrade soon. 

To see if Leidos Holdings shares can catch up to that enviable mark, we have to look at specifics. Each Zen Rating is a composite score, made up of 7 Component Grade ratings — each of which focuses on a particular area.

With the recent outperformance and subpar gains in mind, you won’t be shocked to hear that LDOS is trading at an attractive valuation. In terms of its Value Component Grade rating, it ranks in the top 5% of the equities we keep track of. At a price-to-earnings (P/E) ratio of 16.04x, the stock is cheaper than the wider market average at 31.93x as well as the Information Technology Services industry average of 27.18x.

However, while Value might be the most impressive rating here, it’s far from the only good one. In the past 12 months, Leidos Holdings stock has seen a roughly equal degree of insider buying and selling — which is a huge vote of confidence from the smart money crowd. When it comes to Sentiment, the stock ranks in the 94th percentile.

Our Safety Component Grade rating is a measure of stock price stability, predictable earnings, and revenue consistency — and in this regard, LDOS ranks in the top 8%

Last but not least, we have the balance sheet. Leidos Holdings ranks in the top 16% of stocks when looking at Financials, in no small part due to the fact that the company’s profit margin has expanded from 2% to 7.9% in the past year.

Here’s where things get interesting — the business has been on a roll recently. 

In April, Leidos Holdings landed a $390 million signal intelligence contract from the National Security Agency (NSA). 

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Then, in May, it acquired artificial intelligence cybersecurity startup Kudu Dynamics — and landed a $130 million biometric fingerprint deal with the Federal Bureau of Investigation (FBI). 

As if that wasn’t enough, the company also secured a $205 million contract to modernize IT systems for the Defense Threat Reduction Agency (DTRA).

That’s quite a healthy pipeline — and with the ever-growing appetite for cybersecurity (and ever-increasing defense budgets), LDOS is looking like a steal at current prices.

—> Click here to research LDOS

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