LDOS

A month has gone by since the last earnings report for Leidos (LDOS). Shares have added about 5.5% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Leidos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers. Leidos' Q2 Earnings Surpass Estimates, Revenues Improve Y/YLeidos Holdings’ reported second-quarter 2026 non-GAAP earnings of $3.26 per share, beating the Zacks Consensus Estimate of $2.90 by 12.4%. Earnings increased 1.6% from $3.21 in the year-ago quarter.On a GAAP basis, earnings per share were $2.81, down from $3.01 a year ago. Management attributed the year-over-year decline in GAAP results to discrete costs tied to the Entrust acquisition and the pending joint venture involving security-related businesses. Total revenues came in at $4.56 billion, up 7.2% year over year and above the Zacks Consensus Estimate of $4.36 billion by 4.5%. Organic revenues increased 3.9% to $4.41 billion.The company said revenues grew on higher customer demand for defense technology products, energy and air traffic management solutions, and intelligence mission support. Acquisition and divestiture revenues totaled $150 million compared with $9 million in the prior-year quarter.Demand remained solid in the quarter. Net bookings totaled $4.9 billion, translating into a book-to-bill ratio of 1.1. The trailing-12-month book-to-bill ratio was also 1.1, supporting year-over-year growth in both total and funded backlog. Total revenues came in at $4.56 billion, up 7.2% year over year and above the Zacks Consensus Estimate of $4.36 billion by 4.5%. Organic revenues increased 3.9% to $4.41 billion.The company said revenues grew on higher customer demand for defense technology products, energy and air traffic management solutions, and intelligence mission support. Acquisition and divestiture revenues totaled $150 million compared with $9 million in the prior-year quarter.Demand remained solid in the quarter. Net bookings totaled $4.9 billion, translating into a book-to-bill ratio of 1.1. The trailing-12-month book-to-bill ratio was also 1.1, supporting year-over-year growth in both total and funded backlog. Backlog at quarter-end was $48.71 billion, including $10.22 billion funded and $38.49 billion unfunded. Total backlog increased 5% year over year, while funded backlog jumped 44%.By segment, Intelligence & Digital backlog totaled $18.41 billion, Health was $6.61 billion, Homeland was $9.93 billion and Defense was $13.76 billion. Backlog as of July 3, 2026, included $371 million acquired through the Entrust transaction within the Homeland segment. Cost of revenues totaled $3.74 billion compared with $3.47 billion in the prior-year quarter. Selling, general and administrative expenses increased to $283 million from $217 million, while acquisition, integration and restructuring costs rose to $27 million from $2 million.Operating income was $514 million, down from $571 million in the year-ago period. The operating margin contracted to 11.3% from 13.4%. Interest expense increased to $69 million from $55 million.Adjusted EBITDA declined to $631 million from $647 million. The adjusted EBITDA margin was 13.8% compared with 15.2% a year ago. The prior-year quarter benefited from several one-time, non-operational gains, including a $25 million insurance reimbursement for legal costs. Intelligence & Digital revenues rose to $1.50 billion from $1.41 billion, supported by recent contract awards and higher Intelligence Community mission-support volumes. The segment also included $9 million of revenues from Kudu Dynamics. Non-GAAP operating margin remained unchanged at 10.1%.Health revenues declined to $1.09 billion from $1.18 billion, primarily due to lower medical disability examination volumes. Non-GAAP operating margin decreased to 23.8% from 26.3%.Homeland revenues increased to $1.02 billion from $771 million, driven by continued demand in the Air Traffic and Energy businesses. Results included $141 million from Entrust. Non-GAAP operating margin improved to 12.1% from 9.3% on a better mix of security products, improved program performance and lower indirect expenses.Defense revenues were $955 million compared with $899 million a year ago, reflecting increased demand for several defense technology product lines. Non-GAAP operating margin was 9.9% compared with 10% in the prior-year period. Cash and cash equivalents were $748 million at quarter-end compared with $1.11 billion as of Jan. 2, 2026. Long-term debt, net of the current portion, increased to $6.01 billion from $4.63 billion over the same period.Net cash provided by operating activities totaled $793 million for the quarter, up from $486 million in the prior-year period.Leidos returned $127 million to shareholders, including $72 million in share repurchases and $55 million in dividend payments. Leidos raised its 2026 revenue outlook to $18.20-$18.40 billion from the prior range of $18.00-$18.40 billion. The Zacks Consensus Estimate for revenues is pegged at $18.12 billion, which is below the company’s guided range.Non-GAAP earnings are now projected at $12.20-$12.50 per share compared with the previous range of $12.10-$12.50. The Zacks Consensus Estimate for earnings is pegged at $12.30 per share, which lies below the midpoint of the company’s guided range.The company also raised its cash flows provided by operating activities outlook to approximately $1.85 billion from approximately $1.80 billion. In the past month, investors have witnessed a downward trend in estimates revision. Currently, Leidos has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock has a grade of A on the value side, putting it in the top 20% for this investment strategy. Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Leidos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Leidos belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Roper Technologies (ROP), has gained 5.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. Roper Technologies reported revenues of $2.11 billion in the last reported quarter, representing a year-over-year change of +8.5%. EPS of $5.38 for the same period compares with $4.87 a year ago. For the current quarter, Roper Technologies is expected to post earnings of $5.79 per share, indicating a change of +12.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days. Roper Technologies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report Roper Technologies, Inc. (ROP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Leidos’ second quarter was marked by strong revenue momentum and a positive market reaction, reflecting solid execution in its core defense and homeland segments. Management highlighted that increased demand for defense technology programs and robust bookings, particularly in the Defense segment, were key contributors to growth. CEO Thomas Bell emphasized, “Defense posted a 2.2 book-to-bill ratio in the second quarter,” underscoring accelerated customer procurement activity and Leidos’ unique position in several emerging defense tech programs. The Health segment faced administrative changes, but management noted proactive cost management and ongoing efficiencies. Is now the time to buy LDOS? Find out in our full research report (it’s free). Revenue: $4.56 billion vs analyst estimates of $4.44 billion (7.2% year-on-year growth, 2.6% beat) Adjusted EPS: $3.26 vs analyst estimates of $2.91 (12.1% beat) Adjusted EBITDA: $631 million vs analyst estimates of $594.6 million (13.8% margin, 6.1% beat) The company slightly lifted its revenue guidance for the full year to $18.3 billion at the midpoint from $18.2 billion Management slightly raised its full-year Adjusted EPS guidance to $12.35 at the midpoint Operating Margin: 11.3%, down from 13.4% in the same quarter last year Backlog: $48.71 billion at quarter end, up 5.4% year on year Market Capitalization: $17.46 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Scott Mikus (Melius Research) questioned the impact of government in-sourcing on MHS GENESIS. CEO Thomas Bell explained that while agencies are exploring insourcing, Leidos’ expertise in system maintenance and enhancement should preserve its role, even if integration work is reduced. Matthew Akers (BNP Paribas) asked about margin expectations for the Health segment amid incentive payment suspensions. Bell stated changes are reflected in current guidance and expects quality and efficiency to remain differentiators, with future contract terms still being negotiated. Colin Canfield (Cantor) inquired about free cash flow growth levers. CFO Chris Cage highlighted strong Q2 cash performance, lower capital expenditures, and ongoing efficiency projects, noting “the trajectory on free cash flow performance will continue to be strong.” Seth Seifman (JPMorgan) pressed for details on bookings cadence and intelligence segment contract mix. Bell signaled increased fixed-price contract interest and pointed to new AI and cyber partnerships as supporting future growth and higher-margin work. Tobey Sommer (Truist) asked about Defense segment margin trends as more hardware is integrated. Cage responded that maturing programs are driving higher profitability, with new production contracts expected to reinforce margin expansion. In the coming quarters, our team will monitor (1) the pace of major defense award conversions and production ramp-ups, (2) the outcome and structure of the pending VA health contract recompete, and (3) the impact of fixed-price contracting and in-sourcing across key government customers. Execution in emerging technology partnerships and continued cash flow discipline will also be central to tracking Leidos’ progress. Leidos currently trades at $139.45, up from $118.72 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Maximus, Inc. MMS faces near-term earnings reset after a temporary change to a major federal contract removed a meaningful profitability contributor for the second half of fiscal 2026. The central issue for investors is whether that setback stays temporary or underscores the company’s sensitivity to large government programs, even as other operating improvements provide some support. The Department of Veterans Affairs paused performance incentives and disincentives tied to the Medical Disability Exam program from July 1 through Dec. 31, 2026. The mechanism rewards vendors based on measures such as timeliness, accuracy and quality. Those incentives contributed about 35 cents per share in each of the first three quarters of fiscal 2026. Their removal therefore takes away a material earnings benefit in the fourth quarter and is also expected to affect the first quarter of fiscal 2027 while the pause remains in place. Maximus lowered fiscal 2026 adjusted earnings guidance to $7.90-$8.20 per share from $8.25-$8.55. The midpoint declined by 35 cents, matching the approximate quarterly contribution from the paused VA incentives. Adjusted EBITDA margin guidance fell to about 13.7% from 14.2%. Free cash flow guidance was also reduced to $425-$475 million, showing that the contract changes affects both earnings expectations and cash-generation assumptions, even though full-year revenue guidance remained $5.2-$5.35 billion. Image Source: Zacks Investment Research U.S. federal agencies generated 55% of Maximus’ fiscal 2025 revenues, compared with nearly 32% from U.S. state agencies and almost 11% from foreign governments. That mix provides scale and recurring demand but can magnify the impact of contract changes, procurement delays and agency-specific decisions. The sensitivity is familiar across federal-services peers. Booz Allen Hamilton Holding Corporation BAH says it depends on U.S. government contracts for substantially all of its revenues. Leidos Holdings, Inc. LDOS identifies the U.S. government as its largest customer and serves agencies including the Department of Veterans Affairs. U.S. Services is moving in a more favorable direction. Third-quarter operating margin improved to 10.8% from 10.2% a year earlier, and management expects positive mid-single-digit organic revenue growth in the fourth quarter, with positive organic growth continuing into fiscal 2027. Technology is another offset. Maximus said third-quarter adjusted EBITDA margin of 15.0% reflected automation and AI-enabled efficiencies, while management cited broader use of efficiency-enhancing technology across programs. These gains can support profitability, but they do not immediately replace the earnings contribution lost from the paused VA incentives. The contract modification looks temporary based on current customer guidance, but it has already reduced fiscal 2026 earnings and cash flow expectations. That makes the pace of any incentive reinstatement, along with execution in U.S. Services and federal procurement timing, important variables for the next phase of earnings momentum. MMS currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Maximus carries a VGM Score of A, Value Score of A, Growth Score of B and Momentum Score of B. The favorable Style Scores point to noteworthy valuation, growth and momentum characteristics, but the Zacks Rank reflects weakening earnings estimate revisions and therefore argues for caution in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Maximus, Inc. (MMS) : Free Stock Analysis Report Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

(Bloomberg) -- CoreWeave Inc. shares have been on a roll lately after a monthslong slump. Now, the neocloud provider’s earnings after the close Tuesday can give investors a sense of whether the rally is sustainable. Most Read from Bloomberg China Unleashes $28 Trillion Capital Markets to Challenge US in AI Nvidia Taps Wall Street for $500 Billion Funding Commitment Trump Makes Sweeping New Demands on Iran as Deal Hopes Dim Stocks Churn as Hormuz Standoff Spurs Rally in Oil: Markets Wrap Iran Shakes Up Security Team After Saying Oman Deal ‘Very Close’ The problem is, quarterly results tend to bring out the worst in the stock, which has fallen after each of the company’s last five earnings reports, according to data compiled by Bloomberg. “It almost doesn’t matter what they say on their earnings,” said Willy Lee, principal at venture firm Neostellar, which has held shares of CoreWeave since before its initial public offering. “The market’s still I think locked in on pieces of their earnings where I’m not sure if people fully understand parts of the story, and I think it’s just taken time for people to digest.” It’s been a rocky ride in the stock market for CoreWeave, which rents cloud-computing power for artificial intelligence, since going public in March 2025. The shares have been whip-lashed by the expiration of early investor lockups and shifting sentiment surrounding AI. They more than tripled in their first few months of trading, gave back a good chunk of that gain over the next few months, and have flipped between periods of steep gains and sharp losses ever since. Through it all, the stock is up 120% since the IPO and 23% this year. However it’s still down 41% from the all-time high it hit almost exactly a year ago. The latest downturn started in May after the company’s first-quarter earnings report featured a disappointing forecast that sparked concerns about slowing growth. The stock plunged 56% from a high in May to a low in July. But it has recovered almost half that loss, with a 21% jump in a single session after CoreWeave and Leidos Holdings Inc. announced they were developing AI cloud services for US defense and intelligence operations, followed by last week’s 26% gain, its best performance in over a year. After all that, the company’s earnings will offer a clearer view of where CoreWeave stands at this critical juncture. The company has been spending to build more data center capacity, and it has said that the benefits of those investments should start showing up in the second half of this year, making management’s forward guidance even more crucial than they’ve ever been. “It’s great if you can bring on capacity, but you have to make money from that,” said BNP Paribas analyst Stefan Slowinski, who has an outperform rating on the stock. “The risk is if they’re cautious on that Q3 guidance on the operating profits, then it may not answer those concerns people have. And if all of that has to come in the fourth quarter, then just like with any stock it creates risk if you’re sort of putting all of your eggs into the Q4 basket.” Wall Street expects the Livingston, New Jersey-based company to report a 111% rise in second-quarter revenue to $2.6 billion, and an adjusted net loss of $649 million compared with $131 million a year ago. Analysts have grown increasingly skeptical about this report, raising their projections for CoreWeave’s adjusted loss by 8.4% in the last month and 18% over the last three months. CoreWeave also is expected to post an adjusted operating margin of 2.9% in the second quarter. The figure will be key for investors after falling to about 1% in the first quarter. “I’m hoping that that margin was the low that we’ll see for the year, and that when they report this quarter, it’ll be up from the March trough and they guide to increases each and every quarter in margin,” said Paul Meeks of Freedom Capital Markets. “That’ll make me feel that the ding in short term property profitability is indeed behind us.” The optimism is reasonable considering the biggest AI spenders like Alphabet Inc., Meta Platforms Inc. and Microsoft Corp. are maintaining or raising their capital expenditure plans. The three companies make up roughly 80% of CoreWeave’s revenue, according to data compiled by Bloomberg. At the same time, the field is becoming increasingly competitive. Elon Musk’s SpaceX has inked a number of deals to sell AI computing power, and Meta is reportedly developing plans to do the same. Still, Wall Street remains bullish on CoreWeave due to the overwhelming demand for AI infrastructure. Of the 43 analysts tracked by Bloomberg who cover the company, 29 have buy ratings. The average price target of around $138 implies shares will climb 57% over the next 12 months. “AI infrastructure demand remains exceptionally strong and capacity largely sold out,” Citi’s Tyler Radke, who has a buy rating on the stock, wrote in an August 4 note to clients. Of course, the stock’s position — up from a recent trough but still significantly below its all-time high — also sets up a potential buying opportunity. That is, as long as CoreWeave can deliver a solid outlook that calms concerns around its return on investment and gives investors confidence that it will be able to borrow at a cheaper cost of capital and deliver profits before long. “If they can do that, then it’s kind of a self-fulfilling prophecy,” BNP Paribas’s Slowinski said. “All that has to come together to increase confidence in the company and in the business model.” Tech Chart of the Day Top Tech Stories Tencent Holdings Ltd.’s early success with WorkBuddy may give the Chinese Internet giant a chance to catch up after lagging peers in the artificial intelligence race for the past few years. Intel Corp. raised $20 billion in an upsized share sale, a third more than it was targeting when it announced the deal Monday morning. US investment giants including Apollo Global Management Inc., Blackstone Inc., BlackRock Inc. and Brookfield Asset Management are partnering with Nvidia Corp. to source $500 billion in financing for artificial intelligence infrastructure. Anthropic PBC has struck a $9.1 billion deal with Riot Platforms Inc., a Bitcoin mining company that recently began selling AI data center capacity, people familiar with the matter said, underscoring the Claude maker’s efforts to secure enough computing power to meet its customers’ demand. Apple Inc. is still planning to offer a glass-centric overhaul of the iPhone for the device’s 20th anniversary, people familiar with the matter said, countering an analyst report that the move had been canceled. Earnings Due Earnings Premarket: Earnings Postmarket: --With assistance from Subrat Patnaik and David Watkins. Most Read from Bloomberg Businessweek Lululemon Is At War With Itself Supercharged by Social Media, the GLP-1 Boom Is Warping Teen Psyches Canada Stares Down ‘Quebexit’ Risk How Apple and India Built an Alternative iPhone Production Hub The $5 Billion Cosmetics Company Behind the High-Flying Rhode Brand ©2026 Bloomberg L.P.

Interested in Leidos Holdings, Inc.? Here are five stocks we like better. Leidos delivered a strong second quarter: Revenue rose 7% year over year to a record $4.56 billion, while operating cash flow reached $793 million and free cash flow totaled $761 million. Net awards of $5 billion produced a 1.1 book-to-bill ratio. Management raised its 2026 outlook for revenue, adjusted EPS and operating cash flow, while maintaining adjusted EBITDA margin guidance in the mid-13% range. Homeland Security grew 32% and Defense organic revenue increased 6%, supported by strong bookings and demand for air-defense and counter-drone systems. Leidos strengthened its financial position and growth prospects: It repaid $300 million of acquisition-related commercial paper, reduced expected capital expenditures to about $250 million and plans to resume share repurchases. The company also highlighted potential defense awards and continued support for major health and government technology programs. 3 Stocks Poised to Grow on European Rearmament Spending Leidos (NYSE:LDOS) reported second-quarter fiscal 2026 revenue growth of 7% year over year to a record $4.56 billion, supported by demand across defense, homeland security, intelligence and digital businesses. The company raised portions of its full-year outlook after reporting record second-quarter operating cash flow and solid booking activity. Chief Executive Officer Tom Bell said organic revenue grew 4%, while adjusted EBITDA margin was 13.8%. The company generated $793 million in operating cash flow and $761 million in free cash flow during the quarter. Leidos booked $5 billion in net awards, producing a 1.1 book-to-bill ratio. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Defense Budget Expansion: 3 Mid-Cap Names in a Sweet Spot “Customer procurement activity is beginning to accelerate, so we anticipate continued positive bookings momentum through the rest of this year,” Bell said. The company raised the midpoint of its 2026 revenue guidance by $100 million, increased the midpoint of its earnings-per-share outlook by $0.05, and raised operating cash flow guidance by $50 million. CFO Chris Cage said the company raised the lower ends of its revenue and non-GAAP diluted EPS ranges by $200 million and $0.10, respectively. Leidos maintained adjusted EBITDA margin guidance in the mid-13% range. → 3 Drone Stocks That Should Soar After the Summer Slump Defense Spending Is Rising—Here Are 3 Stocks Built for Turbulent Times Homeland Security was the company’s fastest-growing segment, with revenue up 32% in total and 15% organically. Cage attributed the growth to commercial energy infrastructure, domestic and international air traffic management, and foreign-exchange effects. Defense organic revenue growth accelerated to 6% as the company increased production on integrated air defense and counter-unmanned aircraft systems programs. The segment recorded a 2.2 book-to-bill ratio in the quarter and a 1.9 ratio over the trailing 12 months. → Why Rare Earth Processing Could Be the Real 2027 Opportunity Bell said defense bookings did not yet include the potential benefits of several major technology programs, including a Department of Defense framework agreement valued at more than $1 billion to deliver 3,000 Low-Cost Containerized Munitions by 2030. He also cited Leidos’ work on the Navy’s Medium Unmanned Surface Vessel testing phase, where a potential production award could come in the fourth quarter, and an award to provide sensor payloads for 18 additional missile-warning and missile-tracking satellites supporting Golden Dome. In addition, Bell pointed to the company’s participation in the Army’s Operation Jailbreak Hackathon, where Leidos engineers developed secure, open application programming interfaces designed to integrate hardware with the Army’s evolving command-and-control architecture. “We believe this truly positions us to lead in the defense tech of the future,” Bell said. Management expects Defense to post high-single-digit growth for the full year. Excluding the airborne intelligence, surveillance and reconnaissance business, which is in a transition phase, Cage said the segment is expected to grow at a double-digit rate in 2026. Health segment revenue declined as a fourth vendor was fully incorporated into the Veterans Benefits Administration Medical Disability Examination Regions contract. However, Cage said the company maintained health margins through technology-enabled efficiencies. The Department of Veterans Affairs has suspended incentive payments for all vendors in the medical disability examination program for the remainder of the year while it reviews administrative aspects of the program. Bell said Leidos has incorporated the impact of the suspension into its updated 2026 guidance. Management expects health revenue to remain around second-quarter levels for the rest of the year, with non-GAAP operating income margins of about 20%. Bell said the VA is likely to extend the current domestic Regions contract into early 2027, potentially through midyear, as the recompete process proceeds. He said Leidos expects a draft request for proposals soon, followed by a formal solicitation in the coming months. The company also expects extensions for its pre-discharge and international work. While acknowledging uncertainty around the eventual recompete terms, Bell said the VA remains focused on quality, veteran experience, timeliness and cost. Leidos is also pursuing growth in behavioral health, rural health and related programs, including the My Service Treatment Record pilot initiative. Bell addressed the next phase of MHS GENESIS, the Department of Defense electronic health records system. He said Leidos developed and deployed the system globally under its original 10-year contract, and the Defense Health Agency may now procure underlying software directly from commercial vendors. Leidos expects to continue supporting and enhancing MHS GENESIS under a sole-source bridge contract while the agency determines its long-term acquisition strategy. Bell said agencies are showing greater interest in insourcing systems integration and commercial technology procurement, but he believes they will continue to need contractor support for maintenance, enhancement and mission systems integration. The company also sees a growing opportunity for fixed-price, outcome-based contracts. Bell said government customers are increasingly asking Leidos to propose fixed-price arrangements, while Cage said the company’s expanding software and technology offerings could support that model. Leidos repaid the remaining $300 million of commercial paper associated with the ENTRUST acquisition during the quarter. It ended the period with $6 billion in debt, $748 million in cash and cash equivalents, and gross leverage of 2.5 times. The company spent $66 million on open-market share repurchases in the second quarter, completing its prior 2022 repurchase authorization. Bell said a new board authorization is in place and Leidos expects to resume repurchases when its trading window opens. Cage said expected capital expenditures for the year have been reduced to approximately $250 million, increasing implied free-cash-flow guidance by about $150 million. Management said it expects the business to remain relatively low in capital intensity even as it invests in defense technology programs and other growth initiatives. 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 [email protected]. The article "Leidos Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Leidos Holdings, Inc. LDOS used its fiscal second-quarter call to emphasize that faster Defense, Homeland and Intelligence & Digital growth is offsetting pressure in Health. Management raised revenue, earnings and cash flow guidance despite changes in the Veterans Benefits Administration medical-exam business. The call gave investors more detail on defense-tech scaling, the VBA recompete and how agency in-sourcing could reshape Leidos’ role in health-system integration. Executive vice president and CFO Chris Cage said fiscal 2026 revenue guidance is now $18.20-$18.40 billion, while non-GAAP earnings guidance rose to $12.20-$12.50 per share. Cage raised operating cash flow guidance to approximately $1.85 billion. The adjusted EBITDA margin outlook remains in the mid-13% range, and the guidance excludes the pending Security Enterprise Solutions joint venture with Analogic. Second-quarter non-GAAP earnings of $3.26 per share topped the $2.90 consensus mark. Revenues of $4.56 billion exceeded the Zacks Consensus Estimate of $4.36 billion. Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote CEO Tom Bell said Defense posted a 2.2 book-to-bill ratio in the quarter and 1.9 over the trailing 12 months. He also cited a $12 billion pipeline of Defense Tech opportunities over the next year. Bell highlighted low-cost containerized munitions, the small cruise missile, IFPC, space-sensor payloads, autonomous vessels and counter-UAS capabilities. Leidos plans to deliver 3,000 containerized munitions by 2030 under its framework agreement. Cage said profitability should improve as programs mature and production volumes rise. Bell added that management can see double-digit profitability and double-digit revenue CAGR over time in Defense Tech. Bell said the VA suspended incentive payments for all vendors in the medical disability examination program for the rest of 2026. He said the change is incorporated into the higher companywide guidance. Cage expects Health revenues to remain near second-quarter levels for the balance of the year, with non-GAAP operating margins around 20%. Management views the fourth-quarter run rate as the starting point for 2027. A BNP Paribas analyst pressed for recompete clarity. Bell said Leidos expects a draft request for proposals shortly, formal bids near year-end and customer decisions in early 2027, with extensions providing continuity into next year. A Melius Research analyst asked whether the next phase of MHS GENESIS signaled a broader reduction in systems-integrator roles. Bell said agencies are exploring more in-sourcing and direct commercial-software purchases. Bell maintained that Leidos can shift toward higher-level mission integration while continuing to maintain and enhance MHS GENESIS. Cage said negotiations are continuing because the customer lacks capacity to absorb all current activities. A JPMorgan analyst asked about fixed-price work. CEO Bell and CFO Cage said customers are increasingly requesting outcome-based contracts, a model they believe fits Leidos’ software, cyber and mission-technology offerings. Cage emphasized second-quarter operating cash flow of $793 million and free cash flow of $761 million. Lower expected capital spending, now closer to $250 million, lifted implied full-year free cash flow guidance by about $150 million. Bell reiterated that Leidos remains a low-capital-intensity business, with capital expenditures generally targeted at 1% to 1.5% of revenues, even as it funds selected Defense Tech programs. Leidos paid down $300 million of commercial paper, completed a $66 million open-market repurchase and put a new board authorization in place. Bell said expensive acquisition targets favor a balanced approach to investment, repurchases and dividends. Management’s tone was confident but centered on execution. Defense and Homeland are carrying more of the growth load while Health moves through contract and incentive changes. The priorities are converting bookings into revenues, protecting cash generation and securing the VBA franchise without slowing investment in defense tech, cyber and energy infrastructure. LDOS carries a Zacks Rank #3 (Hold), alongside Value and Growth Scores of A, a Momentum Score of B and a VGM Score of A. The Style Scores indicate favorable value, growth and momentum characteristics, while the Rank carries a Hold stance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The combination is constructive but lacks the stronger signal associated with Zacks Rank #1 or #2 (Buy) stocks paired with A or B Style Scores. The Zacks Rank can change as estimates are revised after the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. 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Image source: The Motley Fool. Tuesday, Aug. 4, 2026, at 8 a.m. ET Chief Executive Officer - Tom Bell Investor Relations - Stuart Davis Chris Cage Operator: Greetings. Welcome to Leidos Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Stuart Davis from Investor Relations. Stuart, please go ahead, sir. Stuart Davis: Good morning, and welcome to our second quarter fiscal year 2026 earnings conference call. The presentation slides we'll be using are on our Investor Relations website. Turning to Slide 2. Today's discussion contains forward-looking statements based on the environment as we currently see it, and thus includes risks and uncertainties. Today's press release contains more information on the specific risk factors that could cause actual results to differ materially. Finally, on Slide 3, we'll discuss GAAP and non-GAAP financial measures. A reconciliation between the two is included in today's press release and presentation slides. With that, I'll turn the call over to CEO, Tom Bell, who will begin on Slide 4. Thomas Bell: Thanks, Stuart. I'm pleased to report another strong quarter for Leidos. Second quarter revenue grew 7% year-over-year, 4% organically to a record $4.6 billion. Adjusted EBITDA margin remained best-in-class at 13.8%. Operating cash flow reached a Q2 record of nearly $800 million and we booked $5 billion in net awards, delivering a solid 1.1 book-to-bill ratio. Customer procurement activity is beginning to accelerate. So we anticipate continued positive bookings momentum through the rest of this year. Our year-to-date financial performance indicates to us that our NorthStar 2030 growth strategy is working. And as a result, I'm pleased we can raise the midpoint of our 2026 revenue guidance by $100 million, raise the midpoint of our EPS guidance by $0.05 and raise operating cash flow guidance by $50 million. Now let me take a few moments to highlight some important developments in two of our segments that I know are top of mind for our investors, Defense and Health. In Defense, our team delivered another exceptional quarter. Revenue growth accelerated, margins expanded and award velocity is accelerating. Defense posted a 2.2 book-to-bill ratio in the second quarter. Over the trailing 12 months, this equates to a 1.9 book-to-bill ratio. This level of customer traction gives us continued confidence in this segment's robust business outlook as a part of Leidos. And importantly, these bookings do not yet reflect the benefit from several major defense tech programs begun this year. These include our over $1 billion framework agreement with the Department of War to deliver 3,000 low-cost containerized munitions by 2030. Our unique position in the testing phase of the Navy's next-generation medium unmanned surface vessel. This positions us for a potential production award in Q4. And our recent award to provide the sensor payloads for an additional 18 missile warning and missile tracking satellites in support of Golden Dome. But in addition to these hardware successes, our Defense team continues to leverage the unique power of One Leidos, bringing together hardware and software, products and services to win in ways few competitors can match. To illustrate the power of this unique One Leidos capability, let me briefly highlight Leidos' role in the recent Operation Jailbreak hackathon by the U.S. Army. There, engineers from our Defense and digital businesses worked side-by-side to rapidly develop and deploy secure, open application programming interfaces that enabled our hardware to integrate seamlessly with the Army's evolving command and control architecture. And perhaps more importantly, we demonstrated those same capabilities on non-Leidos systems validating secure interoperability using open and documented standards. Our team was among the first to complete the Army's Technical Sprint objectives. They consistently led the Operation Jailbreak's progress metrics by demonstrating the speed, agility and success that today's software-defined battlefield demands. That performance reinforced Leidos' leadership role in open architectures, and it represents a major step in helping the Pentagon rid themselves of a huge issue. That issue is the prevention of seamless battlefield understanding and seamless command and control due to proprietary software vendor lock. By bringing together advanced hardware, mission software, systems integration and deep operational expertise, all housed within One Leidos, we delivered differentiated capabilities at the speed our customers required. We believe this truly positions us to lead in the defense tech of the future. And our performance during this hackathon is garnering us more and more customer interaction and customer traction. Now in Health, Demand for our VBA medical disability exam business remains strong through the second quarter, and we are now actively positioning this business for the customers' upcoming recompete. The VA recently advised that it is reviewing certain administrative aspects of the medical disability examination program. And as a part of that review, the VA has decided to suspend incentive payments for all vendors for the rest of this year. In addition to embracing this customer decision, we've worked proactively with the VA to apply the real savings we've been able to achieve in our existing regions contract through focused insertion of technology and innovation, across our predischarge and international contracts. Taken together, this now gives us a clear picture of the probable 2026 full year performance for this business. And that outlook is fully reflected in our enhanced 2026 guidance I mentioned earlier. Elsewhere in Health, I'd like to clarify some recent reporting surrounding the next phase of MHS GENESIS. Under our original 10-year contract, Leidos successfully developed and deployed globally the Department of War Electronic Health Record system on time and under budget. We are very proud of this fact. And consistent with the original vision for this program, our execution now enables the Defense Health Agency to procure underlying software directly from commercial vendors if they so choose. As the DHA finalizes its long-term acquisition strategy for the new health care delivery solution program, we'll continue to support and enhance MHS GENESIS under a sole-source bridge contract. And whatever structure comes next, we believe we are well positioned to continue supporting both the DHA and MHS GENESIS. Also, while looking forward, we're leveraging our unique MHS GENESIS expertise for the My Service Treatment Record pilot program we discussed during last quarter's call. We're actively progressing this new program across both the Department of War and the VA and believe it can be a significant business driver for us in the future. Finally, on capital deployment, during the second quarter, we completed our previous 2022 board share repurchase authorization with a $66 million open market share repurchase. A new Board authorization is now in place. So we anticipate resuming repurchases as prudent when our trading window opens. In closing, our second quarter results once again demonstrate the strength and resilience of the Leidos portfolio and the value of our NorthStar 2030 Strategy. We're seeing meaningful growth emerge across our defense tech, energy and cyber growth pillars. And because of the benefits of our NorthStar 2030 Strategy and the resilience of our portfolio, we can once again raise our full year guidance. With that, I'll turn the call over to Chris now and then look forward to our conversation. Chris? Chris Cage: Thank you, Tom, and thank you, everyone, for joining us today. Let's jump right into the results on Slide 5. As Tom highlighted, revenues for the quarter was $4.56 billion, up 7% in total and 4% organically year-over-year. Bottom line performance remained strong. Adjusted EBITDA was $631 million for the second quarter for an adjusted EBITDA margin of 13.8%. Non-GAAP diluted earnings per share grew to $3.26, and we were able to turn those earnings into cash at a record pace. In the quarter, we generated $793 million of cash flows from operating activities and $761 million of free cash flow. Turning to the segment-level view on Slide 6. Homeland led all segments with 32% total and 15% organic growth. Growth reflected robust demand in commercial energy infrastructure and domestic and international air traffic management as well as some benefit from foreign exchange movements. Defense accelerated to 6% organic growth as we ramped up production on Integrated Air Defense and counter UAS programs. And Intel and Digital maintained its robust growth rate from Q1, principally from strong intelligence community demand. As expected, Health segment revenues contracted from the full incorporation of the fourth vendor on the VBA Medical Disability Examination Regions contract. Even so, we were able to maintain health margins through continued efficiencies enabled by technology insertion. Profitability increased significantly in Defense and Homeland from Q1 levels through strong program execution. Changes in estimates at completion were a tailwind in the quarter, consistent with our historical experience. In addition, margin benefited from prudent corporate cost management and excellent award and incentive fee performance. As shown on Slide 7, we paid down the remaining $300 million of commercial paper tied to the Entrust acquisition and ended the quarter with a very strong balance sheet. At quarter end, we had $6 billion of debt and $748 million of cash and cash equivalents. Gross leverage fell to 2.5x. Finally, on to the forward outlook on Slide 8. As Tom indicated, we're enhancing our guidance for revenues, earnings and cash. Specifically, we're raising the lower end of our ranges for revenue by $200 million in non-GAAP diluted EPS by $0.10. and increasing our operating cash flow guidance by $50 million. We're now expecting CapEx to be closer to $250 million for the year. So the implied free cash flow guidance is up about $150 million. We're maintaining our adjusted EBITDA margin guidance of mid 13%. And this guidance excludes any impact from the pending SES joint venture with Analogic, which we still expect to close later this year. Importantly, we are diversifying the earnings power of the company, so we are able to raise guidance despite the VBA MDE changes that layer in over the third and fourth quarters this year. In fact, on an organic basis, we expect the rest of Leidos to grow approximately 7% in revenues and 19% in adjusted EBITDA in 2026. Diving a little deeper we see Health segment sustaining revenues around Q2 levels for the rest of the year with non-GAAP OI margins around 20%. Conversely, Defense growth will accelerate and post high single-digit growth for the year. If you exclude the airborne ISR business, which is in a transition phase, Defense will grow double digits in 2026, which is a better indicator of its launch point heading into 2027. With that, operator, we're ready to take questions. Operator: [Operator Instructions] Our first question is going to come from the line of Scott Mikus with Melius Research. Scott Mikus: Tom and Chris, on DHMSM/MHS GENESIS, the next -- the reports indicate the next phase -- DHA, sorry, plan to do the integration internally. Did you get information from the customer on why they chose to go that route? And is this kind of a one-off situation? Or do you expect other agencies to limit the role of systems integrators going forward? Thomas Bell: Thanks, Scott. Appreciate the question. I think, honestly, the trend here is that there is an interest in-sourcing across many government agencies right now. What they're interested in-sourcing is the systems integration, as you say, but also the acquisition of commercial technology per the aspirations of this administration. So we see that trend continuing across many agencies. That being said, while that has been a value-added service for Leidos in the past, what we're able to do is transition our value-added services into higher-level mission systems integration capabilities. Just integrating the system was what got them to the place where they can now commercially acquire the software themselves and perhaps do some of the systems integration themselves. But as you're seeing with MHS GENESIS, there's still a need for us to maintain the system, enhance the system and partner with them in terms of making the system match fit for the future. So while we see a lot of conversations around in-sourcing and it's understandable why our customer would want to make sure that they have organic capability. It's difficult to see that they can in-source it all and have the manpower necessary to do the whole work. And so we're seeing them also contract with us as their partner going forward. When you cut away from that, and raise up back to the 30,000-foot level, you see that for all that's changed, very little has changed. There's a little bit of churn. There's a little bit of change in what our partnership looks like. But at the end of the day, they're still looking for us to help them maintain, enhance and make sure the system is working for the future. Chris Cage: Scott, I'd just add that even in the case of DHMSM, ongoing negotiations are taking place around how we can continue to support them even with the current set of activities. So it's trending the way Tom talked about potentially, but at the same time, the customer doesn't necessarily have the capacity to jump in and do all the activities that Leidos has historically supported. So there's a good chance that we perpetuate that as is, and then we'll play for the value-added piece as the future becomes more clear. Operator: Our next question comes from the line of Matt Akers with BNP Paribas. Matthew Akers: I just wanted to follow up on the VBA recompete commentary you gave in the opening remarks. I think you said the incentive payments going away in the rest of this year? Is there any conclusions that we could draw from -- for 2027? Any more clarity there? Any thoughts on kind of where margins could go in that Health business? Thomas Bell: Sure. Thanks for the question, Matt. I'm not surprised. It's one of the first ones that was asked this morning. Yes, as I said on my prepared remarks, we were informed in late May that the customer was considering withdrawing the incentive scheme from all vendors for the medical disability exam business, and we concurred with their decision there. As I said, that's driven by some administrative issues they have that their auditability and how those incentive payments have been given is in question. And so while they sort themselves out, they want to pause those incentive payments. It's been very clear that's for this year only. And I was just with the leadership of the Veterans Administration yesterday to seek clarity on where all this is going. And it became clear in that conversation that while cost is one concern the Veterans Administration has, value better in experience, quality are still things that they are very, very keenly focused on. So while we do not yet have a draft RFP for the recompete, and so we don't know the exact terms that will be a part of the next contract here. I'm pretty sure incentives will be a part of it. and that quality timeliness schedule and cost will be another thing that they focus on incentivizing. So -- just like in the past, where we are very adroit at understanding the rules and working hard to delight our customer and therefore, have a very good business as a result. We expect that whatever the RFP asks for, we'll be able to compete and win because we believe it's going to play to our strengths. At the same time, it's also clear that the customer is highly likely to extend the current contract at least through the first part of next year. As I said, they haven't issued a draft RFP yet for the region's contract. And so -- they're running out of time as it's already August to adjudicate the proposal process. And so we've been informed that they probably will extend the contract through a good part of the early part of next year. And at the same time, for international and predischarge work we do, we've been informed that they plan to extend that for another year. So you can already see bridges to that future working out through the first 6, 9 months of next year. And we feel very strongly that the -- our right to win and the things that have always distinguished Leidos QTC in this marketplace, we'll continue to distinguish ourselves and give us a premier place in the future of the VBE work. So all told, some changes going on. But very importantly, I want to foot stomp once again, Matt, that those changes for this year are fully enveloped in our improved guidance for 2026, so we feel very confident that we understand how this business is going to perform as part of Leidos this year. And we feel very strongly that the rise in the other growth pillars of our NorthStar 2030 Strategy is going to help buoy the rest of the business so that we can improve our guidance on the year despite these changes in costs that are going to be layered in at the rest of this year. I hope that helps, Matt. Operator: Our next question is going to come from the line of Colin Canfield with Cantor. Colin Canfield: As I think about the theme of other parts of the business, essentially offsetting the health margin dynamic and the health growth dynamic. Can you perhaps talk about the free cash flow trends for the company, essentially kind of what do you think are the kind of key levers to get you back to kind of high single-digit low double-digit free cash flow growth? And where do you see the most risk? Chris Cage: Colin, Chris here. Thanks for that. First of all, I mean, extremely pleased with the Q2 numbers we just put up on free cash flow, a banner quarter best ever in the second quarter. And second consecutive quarter we've raised guidance for the year, and then you might have picked up on the fact that we don't see a need now to spend the full amount of CapEx that we had signaled previously, prudently pulling back on that. And therefore, that raises the full year free cash flow outlook even further. So I like the trajectory of the team's performance on free cash flow. And I think that as you think about the investments required in some of the other growth pillars, yes, there will be some additional investments required to propel our Defense Tech business forward. But that, again, fits within the framework that we've talked about historically, looking at 1% to 1.5% of revenue as we see the landscape today. So this is a cash-generating business. It will continue to be a cash-generating business. And beyond that, we've got our enterprise transformation office working hand in glove with my team on how do we take days out of our DSO performance. The benefit of that work is yet to be realized. So good news there ahead of us as they complete some of those efforts. So I think the trajectory on free cash flow performance will continue to be strong. And I see this as an area that we'll be able to show upward momentum as we move forward. Thomas Bell: Colin, just to pick up a couple of themes there that Chris breadcrumbed. What I hope you hear from Chris is that our philosophy as Leidos has never changed from being a low capital intensity business. So while we are certainly leaning in to certain aspects of the business, for instance, our defense tech business, where some investment is required to jump start that engine of growth in the future. On the whole, we still see ourselves as a relatively low capital intensity business, and we plan to keep it that way. That's because the growth pillars we've identified, be it defense tech energy, all we're doing in cyber, our digital modernization aspirations, things we're doing for the FAA and exciting opportunities there, opportunities to help transform TSA and the airport experience for Americans. All these things are areas where it will perpetuate a low capital intensity high cash return, high cash conversion business for Leidos that we expect to perpetuate into the future. Colin Canfield: That's great. And then maybe one follow-up. If you could talk about the free cash flow per share algorithm and where you're seeing the greatest level of sponsor interest across kind of all the sub-portfolio assets? And maybe if you could characterize the interest between sponsors and strategics. Chris Cage: Well, on the free cash flow per share, I mean, as Tom alluded to in his comments, you saw us repurchasing shares. You saw us re-up the share repurchase authorization. No commitment on quantum there, but I think our track record would suggest that has been an area of capital deployment. So you'll see the share count reduce over time, and you'll see the free cash flow conversion remains strong. As it relates to M&A, I think that's where you're going with some of the comments on sponsor portfolios. Again, I think there's areas that we'll look to complement our growth pillars over time. We've got a lot on our plate right now, digesting what's going on with the Entrust integration, which is going exceedingly well. And at the same time, the offloading of the SES business into that joint venture, which we're still extremely excited about and look forward to being able to provide more color on that once we get to closing later this year. So net-net, an active dialogue and active surveilling of the landscape, and we'll continue to keep our powder dry for the right moves to make there as they present themselves. Operator: Our next question is going to come from the line of Seth Seifman with JPMorgan. Seth Seifman: I wanted to start off asking about the cadence of award activity. And I think you made some encouraging comments at the outset of the call. I guess, when we think about the intelligence and digital business, how does the bookings environment look through the end of the fiscal year on September 30? And is there opportunity to exit the government fiscal year with a higher backlog in that business than what we saw at June 30? Thomas Bell: Yes. Thank you, Seth. Yes, I was rather forward in my comments that we are seeing customer activity pick up. I think that's evident in our book-to-bill ratio this quarter. But more importantly, it's indicative of the backlog of awards we see awaiting adjudication in all of our customers' coffers, if you will. From a macro lens, this administration is obviously anxious to demonstrate to the public that they can deliver in advance of the November midterms. And so you hear Secretary for instance, projecting that the vast majority of his unobligated funds from the reconciliation budget of 2025 will be on contract before October 1. And so you're hearing administration officials understand that they want to and need to put this money to work for the economy and put this work -- money to work for the government, and we see indications that's happening. So -- as these obligations flow, we believe those are going to support our second half bookings, which are totally aligned with what this customer wants, be that a more intelligent intelligence community, a stronger defense community aligned with what we've said are our priorities, space, Maritime and now munitions. And so it's no surprise that we're seeing the early indications of that flow through to our Defense business with a book-to-bill ratio greater than 2. Tremendous opportunity for us to now capitalize on those bookings to deliver revenue into the future. So -- we are seeing this occur. We're seeing customer activity pick up. We are confident that, that will continue through the quarter. We're now in the third quarter of this year. And we feel like there's every possibility that a good chunk of that $23 billion of proposals that we have in are going to be adjudicated over the next 3, 6, 9, 12 months. Seth Seifman: Okay. Okay. Great. And then maybe sticking with the intelligence and digital business, there's been some talk about trying to convert more of that work to fixed price over time. How quickly do you see that evolving? How quickly can -- would you expect that mix to change within that intelligence and digital segment? Thomas Bell: Yes. The -- we are in a lot of conversations with customers across all agencies about opportunities for fixed price contracts. In fact, it's almost a weekly occurrence that a customer comes to us and says, "Could you give me an unsolicited to turn this work into fixed price?" That's a conversation we welcome. In fact, that's a conversation sometimes we promote because we know this administration is very keen to have a fixed-price outcome-based results. And fixed-price outcome-based results are something that we feel very comfortable is in our wheelhouse. And so we're seeing that happen. It's certainly happening in the intelligence agency. But at the same time, I hope you've seen our very proactive move to position ourselves for better service to the intelligence community coming on. Full spectrum cyber has been something we've talked about as a growth pillar for Leidos for the last 1.5 years. It's something we leaned into with Kudu. And it's something that is paying tremendous dividends for us in terms of the customer appreciation for our value add as this country becomes more and more cyber savvy, if you will. And so we're very much leaning into that. And here recently, just last week, perhaps you caught the fact that we announced a major partnership with CoreWeave. That whole partnership is geared at positioning ourselves, positioning Leidos to be the preferred provider of secure cloud, AI, sovereign AI for the intelligence community to include the Department of War. Because we know that as the appetite for trusted mission AI solutions grows, the need for the intelligence agencies and the Department of War to have sovereign capabilities through which -- at which they provide those capabilities is going to grow. And that's right in our wheelhouse of knowing a thing or two about how to build a 705 compliance [indiscernible] and ensure that the digits get from it to the point of use seamlessly, flawlessly and in a cyber secure way. So we're very eager to continue to lean into our cyber intelligence and national security objectives, and we feel very good that we're in a great position to do so. Chris, do you have anything to add? Chris Cage: Well, just to build on that, Seth, I would say that, again, you've seen the trend in fixed price percentage of our work increase over time. It's something we know how to do. Encouragingly, in this environment as the customers ask for these fixed price opportunities. It plays to our strength on rolling out new capabilities like Parkade, -- you might have seen another press release announcing a new software tool that we think is a game changer and differentiated, and it's the kind of thing that we do want to sell on a fixed-price outcome-based basis to our customers. And so as we roll out more capabilities like that and more are coming, again, the environment where they're receptive to fixed-price contracting plays well to get those deals done. So excited about the trajectory we're seeing in that part of the business. Operator: Our next question will come from the line of Tobey Sommer with Truist. Tobey Sommer: I was hoping to get your perspective on the Defense business, not just the programs that you've touched on in your prepared remarks, which you're getting some visibility into, but also what you may be seeing over the horizon in terms of opportunity? And what the addition of more hardware in the mix bodes for margin in Defense? Thomas Bell: Yes. Thanks for that, Tobey. We're very bullish about our Defense Tech business. And again, just to step back, when we announced our NorthStar 2030 growth strategy, we said that Defense Tech would be 1 of our growth pillars and the specific engines we selected under that growth pillar were space and maritime. We are now at the point where we're expanding the number of growth engines we see as plausible and probable in our defense business to include munitions and to include counter UAS capabilities in keeping with some other things. So we're very bullish about the suite of products we have in our defense tech business. and the opportunities for them to be key enablers for macro programs like golden dome and macro needs like base defense and counter UAS, which as we all see around the world, is growing in importance every day. On the munitions front, it's very important that we talk for just a minute about two programs in addition to the IFPC program we've talked about for years. IFPC is now a program that is hitting its full stride in production, we're delivering more and more units every year, every month. And it's a program that is hitting its test objectives and hitting its fielding objectives with the customers. So we feel like that program is in full swing now. But quickly on the heels. We've got the small cruise missile, which has been named by the U.S. Air Force as AGM-190A or recently renamed Sphere by the customer. And that program also is undergoing flight tests and actual deployment in exercises and in combat. And so we're very pleased that our small cruise missile has found great customer receptivity and the scaling in both the SOCOM and the U.S. Air Force is a conversation that is ongoing in addition to scaling it to a family of systems. Part of that family assistance is what allowed us to have our LCCM framework that we announced earlier this year. That program is moving along very adroitly. We're ticking off critical milestones. And we have a production readiness and scaling review scheduled for later this month. So you can see how quickly we're moving from rapid prototyping into scaled production. And that means we're on track for full flight tests next summer and full rate production thereafter and 3,000 units before the end of this decade. All told, the addressable markets that we're talking about here just for low-cost and containerized munitions is in excess of $44 billion over the next 10 years. And so when you combine what we're doing on IFPC, SCM low-cost containerized munitions, you add our very specific exquisite, some people call it Gucci capability in space sensing payloads. You add our prowess with Leidos Gibbs & Cox and our LAVA software for autonomy our whole autonomous vessels capability for what we all know is the future of the U.S. Navy. We feel very good about hitting our stride on a number of engines in this defense tech business, which leads us to the bullish outlook that I talked about before and like Chris talked about in his prepared remarks of double-digit profitability, and we can start to see double-digit CAGR of revenue growth. So very bullish on the opportunity for this growth pillar to pay tremendous dividends for us over the coming 5 to 10 years. Chris, anything you'd add to that? Chris Cage: Just to -- Tobey, back to your question on margins, and Tom alluded to it, as we see these more maturity in some of the programs we've already fielded a being a great example, radar systems. We're seeing the profitability of those programs increase, as you would expect. On our space payloads, every tranche has had higher profitability than the previous tranche 0, 1, 2. Now we've announced our most recent win. And so again, more quantities, more maturity, you're seeing the trajectory exactly the way we want to see it. And therefore, again, continue to be very bullish around looking out to 2030, the margins in that part of the business really accelerating. Thomas Bell: I just looked up my note here, and my notes say that we have a $12 billion pipeline of visual opportunities in the next 12 months. So we are very excited about the opportunities in front of us here. Operator: Our next question comes from the line of Sheila Kahyaoglu with Jefferies. Sheila Kahyaoglu: Lots of helpful color on health and all the moving pieces. As we think about the removal of the incentive fees in Q2 and for the remaining part of the year. How do we think about '26 and '27, which is the VBA overhang, what's a good baseline for profitability? I know it's hard because the RFP isn't out yet, as it relates to VBA and give some as we think about those two programs transitioning in '26 on the revenue and margin side? Thomas Bell: Yes. Thanks, Sheila. I'll start, and then I'll ask Chris to pick up some details. Again, we think that as these changes that the customer is requesting of us get layered in over the remainder of this year over the next 6 months. The fourth quarter performance of that business probably is a good jumping off point for what we're looking at for 2027. So as I said in my prepared remarks, with the VA administrator yesterday, the need for quality, the need for veteran experience the need for capacity to do more exams quickly and more efficiently is a key for them. But also key for them is the partnership that we've had in the past. So -- we feel like we've got a good jumping off point. We are eager to see the draft RFP, but the whole point of a draft RFP is to have a dialogue about the law of unintended consequences and what it incents us to do. So the conversations that we're having with the Veterans Administration is we look forward to the dialogue around that RFP to ensure that it continues to incentivize the behavior at the veterans and the taxpayer would expect this administration to put at the forefront. We think that plays to our strengths. We think that means this will continue to be a viable, strong business for us in the future. But there's so much, Sheila, that is focused on this specific 1 element of our value add to what we do in managed health. And I'd like to maybe broaden the aperture a little bit beyond that. because the fact is, while that's one part of what we do, this is a market that is looking to grow annually to about -- from $13 billion today to about $15 billion by the 2030. And in Behavioral Health, an area of focus for us to grow in and Rural Health, two of our growth engines we've talked about before, that market is expected to grow by 4.3% and 4.5%, respectively. And so -- on a CAGR basis. And so we expect to continue to have our MDE business, which also is projected to grow at about 2%, 2.1% level. But -- we look at that as a base of business from which we continue to grow our managed health pillar. And we expect to grow our managed health pillar by leaning into the very large rural health network we have, our proprietary capability of providing rural health around the whole of the United States. And our already premier place in behavioral health. Again, we talked on last call about Military OneSource and that takeaway that we were awarded for that program, a huge testament to our capability to help the Department of War and the Veterans Administration with Behavioral Health that is so required for these communities. And so we see the fourth quarter as the probable sustaining feature for this MDE business over the long run. But we also look to grow things like mySTR, things like military OneSource, things like the Military Family leave counseling program that we do and our rural health business that is a tremendous opportunity for us to grow into the future. So understand why MDE gets so much heat and light but there are growth engines beyond it that we're focused on also. Chris, anything to add? Chris Cage: Yes. Tom, you covered it well. I'd say that, yes, obviously, job 1 is to resecure this franchise. And as Tom pointed to, the rules of engagement are becoming clearer. And we're partnering with the customer. We're absorbing the headwinds that the back half of this year will have because of the changes in those conditions. And the strength of the portfolio is shining through the world overcoming then. But -- so Q4 run rate, resecure the recompete, anticipate some level of efficiencies that we just priced into predischarge and international ripple into that recompete when it is secured at some point next year, that's job one. But beyond that, I'd generally highlight, we've added a lot of additional talent and health because there are so many good things going on, as Tom talked about. New Growth Officer, a new Chief Product Officer in Health, bringing a lot of expertise to how we take not only mySTR but the whole rural campaign to the next level. I mean, you have to appreciate that Leidos through our QTC subsidiary has a network of more than 15,000 providers, 90 clinics. We do 2.8 million examinations annually. So you think about the activity level that we're putting through here, there's a massive platform at scale here that we can leverage for so much more in this domain. So that's -- that's the game we're playing. That's the opportunity that's ahead of us, transitioning to resecure this recompete and then building from there. Operator: Our next question will come from the line of Ken Herbert with RBC. Kenneth Herbert: Tom and Chris, I just wanted to take a minute and see if you can talk about the guide for this year. It looks like organically, you're guiding in the second half to, call it, 4%, maybe 4.5% growth. As you look at the various segments after really strong bookings through the first half of the year, where do you see the most conservatism maybe across the segments? And maybe can you just talk about what's embedded in the top line guide relative to risk associated with the CR or other timing around contracting activity? Chris Cage: Ken, thanks, Chris here. I mean, obviously, the guide -- the conversation we just had about what's going on in health is fully incorporated in that back half, right? So those -- the health run rate kind of staying at the Q2 levels on the top line. But meanwhile, building momentum in other parts of the portfolio, certainly, you saw a robust quarter in Q2 out of Homeland, and there's an opportunity to continue to see that tick up over the back half. The growth rate won't be as robust, but the absolute dollars of revenues increase. And great news about that business is you're not at risk significantly from any shutdown or even CR implications because predominantly, it's driven by what's going on internationally and what's going on with our energy business. We see that Defense, obviously, is going to continue to accelerate on the top line. And -- we -- there are some new program starts in there that are anticipated. They have modest contributions for the year. We think the ranges that we provided allow for that. And if things break our way, you'd see us certainly trending towards the top end of that. In Intel and Digital, those are probably the areas that are most vulnerable if there are some continued disruptions at year-end. We don't anticipate a shutdown. But at the same time, we'll get a continuing resolution of some kind and then let this play out after the midterms are resolved. So I think there's opportunities for more acceleration in Defense. I think we're pretty range bound on what we talked about in health and Homeland continues to excel. If we get the FAA program broke our way, which is a massive opportunity. Again, there's some upside there as well. So I think the guidance gives you a good range of outcomes that we fully expect to deliver on. Thomas Bell: Long and short, Ken, is we've got our out here at Leidos and we're never going to stop working. Operator: Our next question will come from the line of Gavin Parsons with UBS. Gavin Parsons: Appreciate all the color on VBA, but I apologize if I missed your expectation for the timing of the RFP. Are you still expecting that this year? And is that what you need to have full visibility into financials on that program going forward? Thomas Bell: Yes. Sure, Gavin. Yes. And no apologies necessary. Yes, we expect the draft RFP any day. And then we hope that, that will turn into a formal RFP, let's call it, 30, 45, 60 days later, and then you're in the bid process. Any way you slice that given it's August 4 today means that you're probably not submitting formal bids until close to the end of the year. And that means they're making decisions early next year in all likelihood. That's why what I said, Gavin, about indications -- clear indications from the customer that we can expect an extension of our current domestic regions contract for up to 6 months. That's a contractual pause that is in the contract that they have now. So we fully expect that they'll be exercising that option in the coming months, which will perpetuate the current contract into next year possibly as far as mid next year. And for the predischarge in international, we've also gotten indications that -- or commitments from the customer that they expect to exercise the 1-year of 2-year extensions enabled to them in the next month. So that contract doesn't stop at the end of September. So what you're starting to see here is the draft RFP will come into focus over the coming next couple of few months. By the time we talk on our next earnings call, I expect to have a firm RFP and understand exactly what that business is going to look like going forward. But in the meantime, even the runway for 2027 is starting to clear up because we see the international and predischarge probably extended through September 2027. We see the regions contract probably extended through the better part of next year. And so regardless of what happens with the RFP for the domestic regions contract, you're talking about half a year or so of implementation on that program. So we're starting to see the clouds part. We can start to see our way more clearly, very clearly through the end of this year and starting to see what next year looks like, but we'll wait to see the actual RFP in the next 2, 3 months to give an indication of how that looks for us in the future going forward. Gavin Parsons: Okay. That's very helpful. And I mean, as you can tell, everybody is worried about the margins on that program. You guys performed pretty well on the current iteration. I appreciate you don't have full financial visibility yet. Would you anticipate having the opportunity if there is a margin reset to invest and improve that margin over time? Thomas Bell: Yes. A lot is said about our margin in this business, but the fact is our margins are good in that business because we have invested in that business to be the technology leader, to be the volume leader and to be the quality leader. Again, in conversations that I had with the VA just yesterday, quality, the need for us to maintain a focus on better and quality is key. As Chris was just articulating, our presence around the whole of the nation is not to be trivialized. It's a tremendous presence we have built up over the years, which gives us the capacity to lean in to help this administration continue to serve veterans differentially. Add to that, the 12 mobile units we use that go to the veteran to serve them where they are. We're going to continue to lean in to invest in this business to serve the veterans disproportionately. As a result of that, we think that we are in a reasonably good place from a right to win standpoint. And then once we see the RFP, we'll play the tune that the piper calls. And so we will lean in to continue to differentiate ourselves and we think that differentiating ourselves in the market, especially in this administration, which is so interested in outcome-based contracting, we can play a very strong game in outcome-based contracting that delivers for the veteran, delivers for the taxpayer and delivers for our shareholders. Operator: Our next question will come from the line of John Godyn with Citi. John Godyn: A couple of the themes from the call upward momentum in free cash flow and a healthy balance sheet. I just wanted to revisit how you're balancing growth investments versus M&A versus repurchases? And maybe just get a little bit more detail on that thought process. Thomas Bell: Yes. So we've always had, John, a balanced approach to capital allocation. That's been a hallmark for Chris and I, and our leadership of this corporation. And you can expect that to continue. Obviously, we have leaned in this year from a capital expense standpoint to make sure we are seizing the moment in our defense tech business. But as I indicated earlier, that's not a sustained expectation. That's a point in time expectation. So a 1.5 capital intensity is something that you should assume is more the norm. The Board authorized a new $20 million (sic) [ 20 million ] share repurchase program on Friday. You can expect us to continue to deploy capital equally around the pitch. M&A targets right now are very expensive, and our valuation is not. And so you wouldn't expect me to lean into a very high-priced M&A at this point with my valuation where it is right today. So -- we're going to continue to be the business leaders you expect us to be. We're going to deploy capital intelligently and prudently for all of our stakeholders and all of our shareholders, while at the same time, we remain laser-focused on fully supporting every aspect of this administration's national security agenda. So our priority is always going to be investing in the capacity and the needs of our nation's war fighters. And then once we've satisfied that we're going to continue to grow the business intelligently through organic and inorganic and share repurchase and dividend type of activities. John Godyn: Got it. Very helpful. And I completely appreciate the sort of logic behind balance. But as you mentioned, the valuation is now at multiyear lows. And at different times in the past on the M&A side, you've made very bold moves. I'm just curious if there's appetite to make a bold move on the repurchase to take advantage of market conditions. Chris Cage: Well, again, John, we wouldn't want to tip our hand there. But I mean, again, the reauthorization is in place. I think you've seen over the last couple of years that we've been active when there's no other demands on the capital. The great news is there's a lot of capacity to put to work, and we don't intend on just sitting around on that. So we hear you. We also agree that the valuation isn't where it should be, and we're working hard to correct that. Thomas Bell: Michelle, it looks like we have time for one more question. Operator: All right. Our last question is going to come from the line of Mariana Perez Mora with Bank of America. Mariana Perez Mora: Tom, you just mentioned a couple of sequentials before, $12 billion in the pipeline for digital opportunities. Could you mind discussing the nature of those opportunities? Are there new opportunities for Leidos? Are they recompete opportunities? What kind of duration they are? Are they like a material type contracts are more about like fixed price and higher-margin opportunities for you guys? Thomas Bell: Yes. Thanks for that, Mariana. So yes -- and again, to put that in context, you have to step back. Look, our Defense Tech business has, as I said, $5 billion in awards year-to-date, that includes things like common hypersonic bodies, Army macro 2, Air Combat Command intelligence, IFPC Mobile, I mentioned that in my comments and out our wide area passive sensor production. We also -- if you look back 18, we've got $10 billion of awards in that business. So very clear that momentum is moving. Obviously, 5 minus 10 means we had 5 over the last year, 5 in the last -- in the year-to-date 6 months. And so we're very excited about the trajectory we've got going on here. What we're assuming in that pipeline of opportunities is things like the opportunity in front of us at the Navy's medium unmanned surface vessel program. We are leaning into designing the BBG(X) battleship. We anticipate that there are opportunities for us in this pipeline for small cruise missile as I mentioned, and LCCM production contracts. And so that pipeline over the next 12 months includes most of the things you know and follow-ons to programs that we have right now. I didn't talk a lot about counter UAS, Mariana, but that's an area that this administration is very keen to understand Leidos' capabilities in. Obviously, we have some very exquisite capabilities when it comes to sensing unmanned aerial vehicles, but we also have some robust capabilities when it comes to non-kinetic effects against unmanned aerial vehicles. And so -- the $12 billion of pipelines we see over the next 12 months includes follow-on contracts, new contracts for production of materials that we've talked about before. And then perhaps things like our presence in the counter-UAS. All told, we're talking about growing our Huntsville workforce by leaps and bounds. We've grown that workforce by 13% from the beginning of this year and 33% of that is manufacturing people. And so we're very much a growth engine for the Huntsville economy. Our Defense Tech business is something we're leaning into and expecting to grow into the future. And this pipeline and the robust nature of it is indicative of how positive we see about it in the future. Stuart Davis: And Michelle, I want to thank you for your participation and help on today's call. And thank you to all those that joined in, and we look forward to continuing the dialogue over the next quarter. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day. Before you buy stock in Leidos, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Leidos wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $395,463!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,268,290!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 4, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Leidos. The Motley Fool has a disclosure policy. Leidos (LDOS) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

(Bloomberg) -- SpaceX’s first earnings report following its blockbuster initial public offering is one of the most anticipated events of the summer on Wall Street. Whether it’ll give investors a reason to buy the sinking stock is another matter. Most Read from Bloomberg Beer Dynasty Families Sell €731 Million Stake in AB InBev Apple’s New CEO Taps Retired Hardware Executive for Management Team Taco Bell Met With Michigan on Parasite Weeks Before Recall Mamdani Dismisses Business Leaders Advising NYC’s Mayor’s Fund S&P 500 Closes Near Record High on US-Iran Hopes: Markets Wrap Elon Musk’s satellite, space and artificial intelligence company went public at $135 in June, and the shares have been on a roller coaster ride ever since, shooting up to $225 in the first days of trading and then plunging below the offering price. They closed Monday at $114.53, down 15% from the IPO and 49% from their high on June 16, erasing more than $1 trillion in market value from that peak. 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As many as 911.5 million SpaceX shares worth more than $100 billion will be released on Aug. 6. And that’s just the start as billions of additional shares will be eligible for trading before the end of the year. All of which will weigh on the stock price simply based on the market’s supply and demand function. “It’s a total mess,” said Ken Mahoney, chief executive officer of Mahoney Asset Management. Wall Street expects SpaceX to report a loss of 24 cents per share in the second quarter on $6.8 billion of revenue. The results have been somewhat of a moving target, however, because so little information about the business is available. Analysts have widened their estimates for the company’s loss by 18% in the past month. “I have very little confidence in those estimates,” said Jim Lebenthal, chief market strategist at Cerity Partners. “I don’t mean this obnoxiously, but I think they’re mostly licking their fingers and sticking it in the wind.” What investors and analysts will primarily be looking for is management’s comments on the company’s progress with AI, Starlink and its rocket launch business. “We don’t have concrete earnings power that would be analogous to other parts of the market, but we do have a visionary set of massively capable assets that are in some cases unrivaled over all others,” said Polen Capital’s Cupps. SpaceX’s results come on the heels of a strong run of earnings reports from big AI spenders, including Alphabet Inc., Microsoft Corp. and Amazon.com Inc. Investors are particularly rewarding companies that are showing clear payoffs from their capital expenditures. For example, shares of Amazon and Microsoft surged following the companies’ results. With a market capitalization of roughly $1.5 trillion, SpaceX rivals the size of many megacap tech firms and is bigger than Musk’s other company, Tesla Inc. But its financials aren’t close, at least not yet, meaning investors may apply additional scrutiny to its spending plans. Analysts expect the company to report capital expenditures of $18.5 billion in the quarter and $45.5 billion for 2026. The primary issue facing SpaceX shares is their extreme market valuation. The stock trades at about 448 times earnings estimated over the next 12 months, the highest multiple of any member of the Nasdaq 100 Index, and 26 times estimated sales, which is among the 10 highest ratios in the technology-heavy benchmark. 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And Bernstein’s Douglas Harned is urging investors to ignore the specifics of the earnings report and focus instead on the company’s confidence in the future. “We believe the quarterly results should not matter,” Bernstein analysts led by Harned wrote in a note to clients on Friday. “What will be important is the level of confidence projected by management regarding the company’s growth path. Investors should look beyond short term stock movements as we view the case for a multi-trillion dollar valuation is about ‘if’ not ‘when’, for orbital data center plans.” Tech Chart of the Day Amazon.com Inc. surpassed $3 trillion in market value for the first time, becoming only the fifth company to ever reach the milestone. 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Leidos Holdings Inc. (NYSE:LDOS) reported second-quarter 2026 results that comfortably exceeded Wall Street expectations, prompting the defence and technology contractor to raise its financial outlook for the full year. The stronger-than-expected performance sent the company’s shares 6.4% higher in pre-market trading. Leidos posted adjusted earnings of $3.26 per share for the second quarter, beating the analyst consensus estimate of $2.91 by $0.35. Revenue increased 7% year over year to $4.56 billion, exceeding market expectations of approximately $4.44 billion. The company said the growth was driven by rising demand for defence technology solutions, energy infrastructure projects, air traffic management systems and intelligence support services. Following the strong quarterly performance, Leidos increased its fiscal 2026 revenue guidance to between $18.20 billion and $18.40 billion, compared with its previous forecast of $18.00 billion to $18.40 billion. The midpoint of the revised range, $18.30 billion, is slightly above the current analyst consensus estimate of approximately $18.24 billion. Management also raised its adjusted earnings per share guidance to between $12.20 and $12.50, up from its previous range of $12.10 to $12.50. The midpoint of $12.35 is marginally ahead of analyst expectations. Chief Executive Officer Tom Bell said the company continued to build momentum across several key growth areas. “I’m pleased to report another strong quarter for Leidos,” said Chief Executive Officer Tom Bell. “In addition to achieving milestones for revenue and cash, we booked $5 billion of contract awards. We’re seeing meaningful growth emerge across our Defense Tech, Energy Infrastructure, and Cyber growth pillars.” Leidos generated $793 million in operating cash flow during the quarter, while free cash flow totalled $761 million. The company secured $4.9 billion in net bookings, resulting in a book-to-bill ratio of 1.1. Total backlog increased to $48.7 billion, providing strong visibility into future revenue. GAAP net income declined to $356 million, or $2.81 per diluted share, from $393 million, or $3.01 per share, in the same period last year. The decrease was primarily attributed to $29 million in acquisition-related expenses and restructuring costs. Adjusted EBITDA came in at $631 million, compared with $647 million a year earlier, while the adjusted EBITDA margin eased to 13.8% from 15.2%. Leidos also increased its fiscal 2026 operating cash flow guidance to approximately $1.85 billion, up from its previous forecast of $1.80 billion. Leidos Holdings stock price

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Leidos Holdings (LDOS) reported second quarter 2026 results and updated its outlook, giving investors fresh data on revenue, earnings and guidance after a run of new contract wins and capital returns. See our latest analysis for Leidos Holdings. The recent earnings beat, higher full year guidance and a series of defense and AI related contract wins have helped Leidos Holdings shares post a 9.1% 30 day share price return. However, year to date the share price is down 35.3% and the 1 year total shareholder return is down 30.6%, while the 3 and 5 year total shareholder returns remain positive. If this mix of defense, AI and critical infrastructure has your attention, it can be useful to scan for similar themes. Take a look at 55 AI infrastructure stocks Leidos Holdings has risen on the back of contracts and guidance, but the share price remains well below recent highs. Is the recent 30-day gain a small step in a larger rerating, or has most of the easy upside already passed? The most widely followed narrative on Leidos Holdings sets a fair value of $165.27 against the last close of $118.72. This frames the recent rebound within a larger valuation gap that leans on earnings power, contract visibility and cash returns. Read the complete narrative. Want to see how this AI and automation push is modeled into Leidos Holdings fair value? The narrative leans on steadier top line growth, firm margins and a future earnings multiple that differs from today. Curious which assumptions are most influential in that $165.27 figure and how they tie back to government contracts and cash flow? Result: Fair Value of $165.27 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the bullish Leidos Holdings narrative still faces real tests if U.S. federal contract spending tightens or healthcare related programs such as Medical Disability Exams reset pricing power. Find out about the key risks to this Leidos Holdings narrative. The mix of optimism and concern around Leidos Holdings is clear, and the clock is always ticking on fresh information. Take a moment to review the key risks and rewards for yourself through the 5 key rewards and 1 important warning sign Do not stop with Leidos Holdings. Use the Simply Wall Street Screener to uncover fresh stock ideas that match the way you like to invest. Target potential mispricings by scanning companies that appear attractively valued through the 53 high quality undervalued stocks. Strengthen your focus on resilience by checking stocks with robust finances using the solid balance sheet and fundamentals stocks screener (46 results). Boost your search for income opportunities by reviewing companies offering meaningful yields through the 7 dividend fortresses. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LDOS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]