Leidos (LDOS) Down 3.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Leidos (LDOS). Shares have lost about 3.4% in that time frame, underperforming the S&P 500.But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Leidos due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Leidos Holdings, Inc. before we dive into how investors and analysts have reacted as of late.Leidos Holdings Beats Q3 Earnings Estimates, Raises '25 ViewLeidos Holdings’ third-quarter 2025 adjusted earnings of $3.05 per share beat the Zacks Consensus Estimate of $2.61 by 16.9%. The bottom line also improved 4.1% from $2.93 registered in the prior-year quarter.LDOS reported GAAP earnings of $2.82 per share, implying an improvement from the prior-year quarter’s level of $2.68.The year-over-year upside in the bottom line can be attributed to revenue growth and higher operating income than the prior-year level.LDOS’ Total RevenuesTotal revenues of $4.47 billion beat the Zacks Consensus Estimate of $4.27 billion by 4.8%. The top line also improved 6.7% year over year, driven by increased demand across all customer segments, especially Defense Systems, thanks to strong demand for innovative military products.LDOS’ BacklogThe company recorded a total backlog of $47.66 billion, up from $45.51 billion at the end of the first quarter of 2025. Of this amount, $9.06 billion was funded.Operational Statistics of LDOSThe cost of revenues increased 6.4% year over year to $3.65 billion.LDOS reported an adjusted operating income of $535 million compared with $516 million in the year-ago quarter.Interest expenses totaled $51 million, which increased from the year-ago figure of $46 million.Leidos’ Segmental PerformanceNational Security and Digital: Net revenues in this segment improved 8% year over year to $2.02 billion. The increase can be attributed to recent contract awards, increased volumes on the Defense IT and Intelligence Community mission support program and a modest contribution from Kudu Dynamics.Adjusted operating income improved to $191 million from the year-ago level of $187 million. Adjusted operating margin was 10%, which decreased from the prior-year figure.Health & Civil: The segment recorded revenues of $1.30 billion, up 6.2% year over year.Adjusted operating income totaled $328 million compared with $287 million in the year-ago quarter. The adjusted operating margin was 25.7%, which increased year over year.Commercial & International: Revenues in this segment amounted to $571 million, down 1.2% year over year. This segment recorded an adjusted operating income of $38 million compared with $41 million in the year-ago quarter. The adjusted operating margin was 6.7%, down year over year.Defense Systems: Revenues in this segment amounted to $582 million, up 11.5% year over year. This segment recorded an adjusted operating income of $37 million in line with the year-ago period. The adjusted operating margin was 6.4%, down year over year.LDOS’ FinancialsCash and cash equivalents totaled $974 million as of Oct. 3, 2025, compared with $849 million as of Jan. 3, 2025.As of Oct. 3, 2025, the long-term debt, net of the current portion, amounted to $4.63 billion compared with $4.05 billion as of Jan. 3, 2025.Net cash flow from operating activities totaled $711 million at the end of the third quarter of 2025 compared with $647 million recorded a year ago.LDOS’ 2025 GuidanceLeidos Holdings has raised its 2025 guidance. It currently expects to generate adjusted earnings in the range of $11.45-$11.75 per share, higher than its earlier projection of $10.15-$10.45. The Zacks Consensus Estimate for earnings is pegged at $11.41 per share, which lies below the company’s new guidance.LDOS still expects 2025 revenues to be in the band of $17.00-$17.25 billion. The Zacks Consensus Estimate for revenues is pegged at $17.15 billion, above the midpoint of the company’s newly guided range.It still expects to generate cash flow from operating activities of approximately $1.65 billion.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.VGM ScoresAt this time, Leidos has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a grade of A on the value side, putting it in the top 20% for value investors.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.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Leidos has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.Performance of an Industry PlayerLeidos belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Cognizant (CTSH), has gained 6.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.Cognizant reported revenues of $5.42 billion in the last reported quarter, representing a year-over-year change of +7.4%. EPS of $1.39 for the same period compares with $1.25 a year ago.For the current quarter, Cognizant is expected to post earnings of $1.32 per share, indicating a change of +9.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Cognizant. Also, the stock has a VGM Score of B.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>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 Cognizant Technology Solutions Corporation (CTSH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks