LDOS
Leidos Holdings, Inc.
Technology · Information Technology Services · United States · Stock
Score Breakdown
Scored for Speculative Opportunities profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The composite score of 65.8 is driven primarily by the exceptional momentum sub-score of 19.0/20, which reflects demonstrated sequential improvement in financial performance metrics directly sourced from the FY 2026 10-K filing.
- The dividend sub-score of 16.2/20 adds substantial weight to the overall score by evidencing strong free cash flow payout discipline, a multi-year DPS streak, and meaningful DPS growth CAGR — all filing-derived data points.
- The profitability sub-score of 13.2/20 anchors the model's view that Leidos operates with consistently positive margins, which is characteristic of a scaled government IT contractor with long-duration contract vehicles.
Why Not Higher
- The theme sub-score of 0.0/20 is the single largest ceiling on the model score; had Leidos qualified for even two macro themes, the composite score could have risen by approximately 8 to 10 points based on the scoring model's structure.
- The financial health sub-score of 12.0/20 prevents the score from reaching the upper range because the leverage ratio and interest coverage metrics embedded in the 10-K indicate a balance sheet that carries meaningful debt obligations relative to the company's earnings base.
Data Confidence
10 / 10
Very High — full data coverage
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Leidos Holdings, Inc. is a major U.S. defense, intelligence, and health technology contractor that provides IT services, systems integration, engineering, and mission-critical solutions primarily to the U.S. federal government, including the Department of Defense, intelligence agencies, and civilian departments. The company operates across three core segments — Defense Solutions, Civil, and Health — making it deeply embedded in government IT modernization, national security infrastructure, and health IT programs. Its model score of 65.8/100, sourced entirely from SEC EDGAR 10-K filings for FY 2026, reflects a business with meaningful operational strengths but notable structural constraints. The momentum sub-score of 19.0/20 is the standout metric, indicating strong sequential improvement in revenue, earnings, and margins across recent quarters, while the dividend sub-score of 16.2/20 suggests disciplined free cash flow management, consistent dividend-per-share growth, and healthy FCF coverage of distributions. Profitability (13.2/20) and growth (12.5/20) contribute positively, pointing to reasonable but not exceptional margins and top-line expansion consistent with government contract cycles. Financial health (12.0/20) sits at a moderate level, reflecting the leverage profile typical of large government services companies that carry meaningful debt loads from acquisitions. The theme sub-score of 0.0/20 is a significant drag, indicating that the model's macro theme screening did not identify qualifying thematic exposures in the filing data, which suppresses the composite score. The key research tradeoff is between Leidos's strong operational momentum and dividend consistency on one hand, and its elevated leverage, thin thematic scoring, and government contract concentration risk on the other.
Plain English
Leidos is one of the largest IT and engineering contractors for the U.S. government, helping agencies like the Pentagon and intelligence community run their technology systems. A model score of 65.8/100 means the filing data shows real operational strengths — particularly in earnings momentum and dividend discipline — but also flags concerns around debt levels and limited thematic exposure that prevent a higher ranking. The High risk rating reflects the company's reliance on government contract awards and renewals, combined with a leverage profile that leaves less room for error if revenue contracts or interest costs rise. Researchers treating this as a speculative opportunity rather than a core holding is the framing this score supports.
Bull Case vs. Bear Case
Bull Case
- The momentum sub-score of 19.0/20 — the highest in the model — indicates that Leidos demonstrated consistent sequential improvement in revenue, earnings, and operating margins across quarters reported in the FY 2026 10-K, suggesting underlying business execution is accelerating.
- The dividend sub-score of 16.2/20 reflects a strong free cash flow coverage ratio relative to distributions and a sustained dividend-per-share growth streak, signaling that management is generating reliable cash returns from government contract work.
- The profitability sub-score of 13.2/20 suggests Leidos maintains structurally positive operating and net margins consistent with a large-scale government IT integrator, providing a cushion against modest contract-level disruptions.
Bear Case
- The financial health sub-score of 12.0/20 is the weakest operational metric in the model, pointing to an elevated leverage ratio and moderate interest coverage that could become problematic if contract revenues stall or interest expenses remain elevated.
- The theme sub-score of 0.0/20 indicates that the model's macro thematic screening found no qualifying exposures in Leidos's filing data, meaning the company does not score credit for participation in high-growth secular themes that could drive valuation re-rating among thematically focused research screens.
- The growth sub-score of 12.5/20, while positive, reflects only moderate year-over-year revenue, net income, and EPS growth rates, consistent with the slower-cycle nature of federal government contracting rather than high-growth commercial IT expansion.
What Could Change the Picture
Bullish Triggers
- Evidence in future 10-K filings of meaningful debt reduction or improved interest coverage ratios would lift the financial health sub-score and reduce the High risk designation, strengthening the overall research case.
- Disclosure of qualifying macro theme exposures — such as AI integration contracts, cybersecurity platform investments, or classified data infrastructure programs — in a subsequent annual filing would directly lift the theme sub-score from 0.0 and could materially improve the composite score.
Bearish Triggers
- A deterioration in the momentum sub-score in a future filing period — driven by sequential revenue declines, margin compression, or earnings misses — would remove the primary driver of the current 65.8 score and significantly weaken the research case.
- Any filing-evidenced increase in leverage ratios, reduction in interest coverage, or suspension of the dividend growth streak would simultaneously pressure the financial health and dividend sub-scores, potentially reclassifying the research label downward.
Red Flags
- The financial health sub-score of 12.0/20 combined with the High risk rating suggests leverage levels warrant close monitoring, particularly given that Leidos has historically used debt to fund large acquisitions and may carry meaningful long-term obligations on the balance sheet.
- A theme score of 0.0/20 means the model found zero macro theme qualifications in the 10-K filing data, which could indicate limited organic positioning in emerging technology areas despite the company's IT services branding.
Risk Profile
High RiskThe High risk rating for Leidos reflects a combination of elevated balance sheet leverage captured in the financial health sub-score and the company's concentration in U.S. federal government contract revenue, where budget cycles, contract protests, and continuing resolution periods can create lumpy and sometimes unpredictable cash flow patterns. Researchers should be aware that government contractors of this scale face binary contract renewal outcomes on large program vehicles that can materially shift annual financials.
Key Catalysts to Watch
The key catalysts to monitor for Leidos are large multi-year contract awards or recompete outcomes disclosed in SEC filings, which directly drive the revenue and momentum metrics that currently anchor the model score at 65.8. Secondary catalysts include any filing-period evidence of debt paydown or refinancing activity that would improve the financial health sub-score, as this is the most actionable lever available to lift the composite score within the current model framework.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.