Does Leidos Still Offer Value After 38% Surge and Record Defense Contract Wins in 2025?

Simply Wall St

Thinking about what to do with your Leidos Holdings shares, or considering a new investment? You are definitely not alone. This stock has attracted a lot of attention in 2024, and for good reason. Over the last three years, Leidos Holdings has increased by 123.7%, leaving many broader indices behind. That trend has only accelerated recently, with shares up 6.7% in the past week and a notable 10.6% increase over the last month. With year-to-date gains of 38.2% and a five-year return surpassing 135.9%, it is clear that investors are reevaluating the company’s role in defense and technology, especially as markets react to shifting government priorities and evolving security needs.

This kind of momentum always brings up questions about whether the stock has gotten ahead of itself or if there is still untapped value. That is where valuation comes in. According to our latest assessment, Leidos Holdings scores a 5 out of 6 on our value check, which means it is considered undervalued in nearly all the major ways we measure a company. In summary, there is a strong argument that even after this run, there may be more room for growth.

Let’s break down how Leidos measures up across key valuation methods, and keep reading for an even better way to understand what this score really means at the end of the article.

Leidos Holdings delivered 20.1% returns over the last year. See how this stacks up to the rest of the Professional Services industry.

Approach 1: Leidos Holdings Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting its future cash flows and then discounting them back to today’s dollars. This approach gives investors a sense of what the business could be worth based on its expected ability to generate cash in the years ahead.

For Leidos Holdings, the current Free Cash Flow (FCF) stands at $1.27 Billion. Analysts forecast that by 2028, FCF could increase to $1.74 Billion, reflecting steady growth. While analysts generally provide estimates up to five years out, further projections for Leidos are extended by Simply Wall St through 2035, which indicates a continued upward trajectory.

Based on these cash flow scenarios, the DCF model assigns Leidos an intrinsic value of $308.59 per share. When compared with the current trading price, this implies the stock is trading at a substantial 35.8% discount to its calculated fair value. This gap between price and value suggests that investors may be underappreciating the company’s future cash generation potential.

In summary, the DCF analysis indicates that Leidos Holdings shares appear meaningfully undervalued given current assumptions about future growth and profitability.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Leidos Holdings.

LDOS Discounted Cash Flow as at Oct 2025

Our Discounted Cash Flow (DCF) analysis suggests Leidos Holdings is undervalued by 35.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Leidos Holdings Price vs Earnings (P/E)

The Price-to-Earnings (P/E) ratio is widely considered the primary valuation metric for profitable companies like Leidos Holdings. It offers a straightforward way to see how much investors are paying for each dollar of the company’s earnings, which is a crucial piece of the puzzle when evaluating established businesses with consistent profits.

The “right” or fair P/E ratio for any stock depends on how rapidly investors expect earnings to grow, as well as the risks involved. Strong growth and low risk tend to justify higher multiples, while slower growth or higher risk can pull that number down. It is important to compare a company’s P/E to key benchmarks, including the industry average and peer group, to get a sense of where it stands.

Currently, Leidos Holdings is trading at a P/E ratio of 18.1x. This is well below both the Professional Services industry average of 26.7x and the peer group average of 41.8x. To provide an even sharper perspective, Simply Wall St calculates a “Fair Ratio” for Leidos at 26.1x. This proprietary measure combines factors such as earnings growth, profit margin, risks, industry characteristics, and market capitalization, offering a more tailored judgment than broad industry or peer comparisons.

Comparing Leidos Holdings’ current P/E of 18.1x to its Fair Ratio of 26.1x shows that the stock is trading at a meaningful discount to what would be considered reasonable given its fundamentals.

Result: UNDERVALUED

NYSE:LDOS PE Ratio as at Oct 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Leidos Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let’s introduce you to Narratives. In simple terms, a Narrative is your personalized story about Leidos Holdings, combining your perspective on what will shape the company’s future performance with financial forecasts such as projected revenue, earnings, margins, and what you believe its shares should be worth. Narratives bridge the gap between a company’s unique business situation and a quantitative fair value, making investment decisions more intuitive.

Simply Wall St has made Narratives easy for anyone to use, directly on the Community page. Millions of investors leverage them to make buy or sell decisions by comparing their Fair Value to the current Price. Because Narratives are dynamic and automatically update when new earnings or news is released, you always have an up-to-date, forward-looking view that reflects the latest information.

For example, some Leidos Holdings investors believe that government digital transformation and recurring, high-margin contracts will drive strong future value. This leads them to set a bullish fair value projection around $210. Others are more cautious, citing margin pressures and integration risks, and land on a conservative target closer to $164. Narratives empower you to define your outlook and act decisively as the facts change.

Do you think there's more to the story for Leidos Holdings? Create your own Narrative to let the Community know!

NYSE:LDOS Community Fair Values as at Oct 2025

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.

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