Leidos Stock To $229?

Our multi-factor assessment suggests that it may be time to buy more shares of LDOS stock. We have, overall, a positive view of the stock, and a price of $229 may not be out of reach. We believe there are a few things to fear in LDOS stock given its overall Moderate operating performance and financial condition. Considering stock’s Low valuation we think it is Attractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $22 Bil in market cap, Leidos provides technology and systems solutions in defense, intelligence, civil, and health sectors, including command platforms, data analytics, logistics, cybersecurity, and health services for global clients.

[1] Valuation Looks Low

This table highlights how LDOS is valued vs broader market. For more details see: LDOS Valuation Ratios

[2] Growth Is Inconsistent

• Leidos has seen its top line grow at an average rate of 6.1% over the last 3 years
• Its revenues have grown 3.1% from $17 Bil to $17 Bil in the last 12 months
• Also, its quarterly revenues declined -3.6% to $4.2 Bil in the most recent quarter from $4.4 Bil a year ago.

This table highlights how LDOS is growing vs broader market. For more details see: LDOS Revenue Comparison

[3] Profitability Appears Moderate

• LDOS last 12 month operating income was $2.1 Bil representing operating margin of 12.2%
• With cash flow margin of 10.2%, it generated nearly $1.8 Bil in operating cash flow over this period
• For the same period, LDOS generated nearly $1.4 Bil in net income, suggesting net margin of about 8.4%

This table highlights how LDOS profitability vs broader market. For more details see: LDOS Operating Income Comparison

[4] Financial Stability Looks Strong

• LDOS Debt was $5.2 Bil at the end of the most recent quarter, while its current Market Cap is $22 Bil. This implies Debt-to-Equity Ratio of 23.8%
• LDOS Cash (including cash equivalents) makes up $1.1 Bil of $13 Bil in total Assets. This yields a Cash-to-Assets Ratio of 8.2%

[5] Downturn Resilience Is Moderate

LDOS saw an impact slightly worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• LDOS stock fell 30.4% from a high of $110.49 on 2 December 2022 to $76.92 on 16 May 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 4 December 2023
• Since then, the stock increased to a high of $201.39 on 11 November 2024 , and currently trades at $176.70

 
2020 Covid Pandemic

• LDOS stock fell 42.5% from a high of $123.22 on 18 February 2020 to $70.83 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 16 February 2024

 
2008 Global Financial Crisis

• LDOS stock fell 21.0% from a high of $85.96 on 5 June 2008 to $67.88 on 21 May 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 29 August 2019

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.