Leidos (LDOS): Evaluating Whether The Recent Pullback Has Created a Quiet Undervaluation Opportunity

Leidos Holdings (LDOS) has been on many investors radar this year, and its latest pullback is prompting fresh questions about whether the stock is offering a more attractive entry point again.

See our latest analysis for Leidos Holdings.

Despite the recent pullback, Leidos’ 1-year total shareholder return of 21.72 percent and standout 79.17 percent three year total shareholder return suggest longer term momentum is still firmly intact, even as the 1 month share price return cools.

If you like the mix of defense exposure and steady execution at Leidos, it might also be worth exploring aerospace and defense stocks as you search for similar opportunities in the sector.

With earnings rising faster than revenue and the stock still trading below both analyst targets and some intrinsic value estimates, is Leidos quietly undervalued here, or is the market already pricing in years of future growth?

Most Popular Narrative Narrative: 15.2% Undervalued

With the narrative fair value sitting well above Leidos Holdings last close of $184.95, the stage is set for a valuation built on steady, compounding fundamentals rather than breakneck growth.

Leidos is positioned to benefit from increased, multi year government funding focused on national security, defense modernization, border protection, and infrastructure, particularly through the One Big Beautiful Bill and related initiatives (e.g., FAA air traffic modernization, Golden Dome, maritime autonomy). These are expected to drive robust future revenue growth across core projects. Accelerating customer demand for digital modernization, AI powered solutions, and autonomous systems in defense, healthcare, and intelligence plays to Leidos strengths and is leading to higher quality, higher margin contracts that improve net margins. These capabilities command premium pricing and are in areas of secular growth.

Read the complete narrative.

Want to see how modest top line growth, disciplined margins, and a future earnings multiple combine into that higher fair value estimate? The narrative reveals the revenue runway, earnings step up, and valuation bridge that this price target hangs on, but the specific assumptions might surprise you.

Result: Fair Value of $218.08 (UNDERVALUED)

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

However, political shifts in U.S. federal spending priorities and intensified competition for AI driven, outcome based contracts could easily derail that upbeat earnings path.

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

Build Your Own Leidos Holdings Narrative

If you see the story playing out differently, or want to dig into the numbers yourself, you can build a custom view in minutes: Do it your way.

A great starting point for your Leidos Holdings research is our analysis highlighting 4 key rewards and 1 important warning sign 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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