Is Market Overlooking LDOS Right Now?

Here is why we think Leidos (LDOS) deserves consideration as a value stock.

• Reasonable Revenue Growth: 7.8% LTM and 6.8% last 3 year average.
• Cash Generative: Nearly 7.0% free cash flow margin and 11.4% operating margin LTM.
• No Major Shocks: LDOS has avoided any revenue collapses in the last 3 years.
• Modest Valuation: Despite encouraging fundamentals, LDOS trades at a PE multiple of 15.6
• Opportunity vs S&P: Compared to S&P, you get lower valuation, higher revenue growth, but lower margins

As a quick background, Leidos provides technology-driven solutions in defense, intelligence, civil, and health sectors, including systems, data analytics, logistics, cybersecurity, and health services for global federal and commercial clients.

*LTM: Last Twelve Months

But do these numbers tell the full story? Read Buy or Sell LDOS Stock to see if Leidos still has an edge that holds up under the hood.

That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure

Stocks Like These Can Outperform. Here Is Data

For 65 similar value stocks chosen as of mid 2024, consider the following stats for the subsequent 1 year period.

• Average peak return of 39.3% vs 14.4% for S&P, with maximum peak return of 133%
• Win rate of 60%; win rate represents % of stocks with positive return
• Average 1-year return of 14.6%, similar to S&P’s despite tariff instability

But Consider The Risk

Look, LDOS isn’t immune to big drops either. It dipped 21% during the Global Financial Crisis and took a bigger hit of 29% in the 2018 correction. The Covid pandemic slammed it down by over 42%, and the inflation shock wiped about 30% off its value. Even solid fundamentals can’t fully shield it when markets turn volatile. So, while LDOS has strengths, sharp pullbacks remain a real risk.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read LDOS Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.