Leidos Holdings (LDOS): Assessing Valuation After Robust Q2 Results and Upbeat Guidance

If you are wondering what’s behind the recent moves in Leidos Holdings (LDOS), the latest earnings release may provide the answer. The company just reported Q2 2025 results that came in strong on both revenue and net income, driven by organic growth and a constructive update to full-year guidance. While some investors did take notice of an executive stock sale, the main story appears to be Leidos Holdings’ operational momentum and its positioning within a defense sector that is in focus with Department of Defense priorities.

This operational momentum has shown up in the market. After a solid 19% return over the past three months and a nearly 27% jump since the year began, shares have outperformed many industry peers. For context, Leidos Holdings has more than doubled over the past three years, benefiting not just from sector tailwinds but also from a long-term track record of revenue and earnings growth, which remains front and center after this quarter’s numbers. Still, leadership’s recent insider activity serves as a reminder that valuation and future growth expectations need to be weighed carefully.

So as Leidos Holdings rides this new wave of optimism, the question remains whether the stock is still attractively priced, or if all the good news is already reflected in today’s price.

Most Popular Narrative: 2.7% Undervalued

According to community narrative, Leidos Holdings is considered slightly undervalued relative to its estimated fair value. This reflects optimism about its future earnings and market positioning. Analysts have used a discount rate of 7.4% and project steady growth, but believe the current share price leaves a bit of headroom for appreciation.

Leidos is positioned to benefit from increased, multi-year government funding focused on national security, defense modernization, border protection, and infrastructure. These opportunities are particularly expected through the One Big Beautiful Bill and related initiatives (for example, FAA air traffic modernization, Golden Dome, maritime autonomy), which are anticipated to drive robust future revenue growth across core projects.

Is Leidos Holdings really the next big winner hiding in plain sight? The narrative behind this fair value is built on financial forecasts, contract momentum, and valuation multiples that could surprise even seasoned investors. Interested in the numbers that analysts are watching and the major programs they see as significant drivers? Explore this narrative further and see what could influence your investment thesis.

Result: Fair Value of $186.69 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifts in government funding priorities or heightened competition from tech-focused peers could undermine Leidos Holdings’ growth outlook and current valuation case.

Find out about the key risks to this Leidos Holdings narrative.

Another View: Discounted Cash Flow Model

Looking at our DCF model, there appears to be even more potential upside for Leidos Holdings. This perspective suggests the stock is trading below what the DCF math implies and highlights a different angle for investors to consider. Could this approach point to value that the market has yet to price in?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Leidos Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Leidos Holdings Narrative

If you see these insights differently, or want to dig into the numbers yourself, you can quickly craft your own analysis in just a few minutes. Feel free to do it your way.

A great starting point for your Leidos Holdings research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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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