Leidos Holdings, Inc. (LDOS) Down 5.8% — Time to Reverse Course?
Leidos Holdings, Inc. (LDOS) is under pressure on Tuesday, last changing hands at $135.86 on the NYSE — an $8.30 decline from the prior close of $144.16. The drop extends a long slide for the stock. LDOS now trades roughly 34.0% below its 52-week high of $205.77, a level it reached on November 4, 2025, almost exactly a year ago. That gap shows how much ground the shares have given up over the past twelve months, and today's move adds to it.
Roughly 483,354 shares have traded so far in the session, compared with a 90-day average of about 1.33 million. With the regular session still open, turnover stands at a little over a third of a typical full day.
Why Leidos Holdings, Inc. Price is Moving Lower
The selloff is the result of Leidos' Q3 2026 report and the outlook that came with it. The quarter itself was mixed. Adjusted EPS of $3.62 beat the roughly $3.05 consensus by $0.57, and net income rose 12% to $413 million. Revenue of $4.63 billion, however, missed the $4.71 billion forecast by $80 million, and top-line growth of 3.6% from $4.469 billion a year earlier was modest. The weak spot was the Health segment. Its revenue fell 12% to $1.068 billion, and its operating margin narrowed to 22.5% from 26.8%. Management attributed the decline to lower managed-health volumes and program shifts.
Guidance drew more attention than the quarter. Leidos cut its 2026 revenue outlook to $18.0 billion–$18.2 billion from $18.2 billion–$18.4 billion, while raising adjusted EPS guidance to $12.50–$12.70 from $12.20–$12.50. On its own, that split suggests a company getting more profit from a smaller revenue base. The commentary about next year matters more. Executives said 2027 would not be a bottom-line growth year and cited the Veterans Benefits Administration contract transition. For a stock already about a third below its high, being told that earnings will stall next year gives investors little reason to step in.
The broader market does not explain the move. Early in the session, Lockheed Martin (LMT), RTX, and Northrop Grumman (NOC) were down only 0.65%, 0.29% and 0.6%, respectively, while the S&P 500 and Nasdaq 100 were up 0.11% and 0.4%. Group peers were also largely stable. Automatic Data Processing, Inc. (ADP) slipped just 0.66%, and Waste Connections, Inc. (WCN) was down 0.08%. Leidos' 5.76% decline is a company-specific reaction to softer revenue and a flat 2027 earnings outlook.
What is the Leidos Holdings, Inc. Rating - Should I Sell?
Weiss Ratings assigns LDOS a C+ rating. Current recommendation is Hold. The rating describes a fundamentally sound government services contractor whose shareholder experience has been rough. That keeps it one notch below Buy territory and out of Sell territory.
The business itself scores well. The Excellent rating on the Growth Index reflects 7.17% revenue growth, a solid pace for a contractor that depends on federal budgets and contract awards. The quarter's 3.6% increase is a reminder, though, that the pace is slowing. Leidos is also rated Excellent on the Solvency Index, which suggests the balance sheet can absorb a contract transition like the VBA changeover without strain. The Efficiency Index is rated Good. A 27.78% return on equity is strong for a company that sells labor-intensive engineering and IT services. The 7.80% profit margin, typical of government contracting, explains why that rating stops short of Excellent. The contraction in Health segment margins from 26.8% to 22.5% shows how quickly one of the company's richer businesses can lose profitability.
The picture is less favorable on the market-facing measures. The stock is rated Fair on the Total Return Index, which fits shares sitting about 34% below their November 2025 peak. The Weak Volatility Index reflects swings like today's. A 5.76% one-day drop on a guidance cut and cautious 2027 commentary is large for a contractor whose revenue relies on multi-year government programs. The Dividend Index is rated Fair. A 1.19% yield provides a modest income stream but is not a central part of the investment case. A forward P/E of 13.44 makes the shares look reasonably priced against the raised EPS guidance. That valuation only helps if earnings hold up through a year management has already said will not show bottom-line growth.
Within the Industrials sector, Leidos sits alongside Automatic Data Processing, Inc. (ADP, C+) and Waste Connections, Inc. (WCN, C+). It ranks above RELX PLC (RELX, C), Paychex, Inc. (PAYX, C) and Thomson Reuters Corporation (TRI, C), all of which carry slightly less favorable risk/reward profiles in Weiss's framework.
About Leidos Holdings, Inc.
Leidos Holdings, Inc. (LDOS) is an Industrials company that provides science, engineering and information technology services, mainly to U.S. government agencies. The company is headquartered in Reston, Virginia. It took the Leidos name in 2013 after separating from Science Applications International Corporation, and it has since grown through acquisitions into one of the largest federal technology contractors. Its customers include the Department of Defense, the intelligence community, the Department of Veterans Affairs, the Department of Homeland Security and the Federal Aviation Administration.
Leidos is organized around national security and digital modernization, health and civil programs, commercial and international work, and defense systems. On the national security side, it supplies cybersecurity, systems integration, IT modernization, intelligence analysis and mission software. The health business includes medical disability examinations for veterans and health IT services for federal agencies. This managed-health work currently faces volume pressure and the VBA contract transition. Civil programs include air traffic management systems for the FAA and security detection equipment used at airports and border crossings. Defense systems work covers airborne surveillance and maritime platforms.
The company's competitive strengths come from scale, the security clearances held by its workforce, and long-standing relationships embedded in multi-year federal programs. Smaller competitors find those advantages hard to replicate. Its large backlog gives it some revenue visibility. That same reliance on federal customers exposes Leidos to budget cycles, contract recompetes and transitions on major programs.
Investor Outlook
Leidos Holdings, Inc. (LDOS) carries a Weiss Rating of C+ (Hold). Solid fundamentals and a raised EPS outlook are offset by a revenue miss, lower revenue guidance and management's warning that 2027 will not deliver bottom-line growth. Investors should watch whether the Health segment stabilizes after its 12% revenue decline and how cleanly the Veterans Benefits Administration contract transition plays out. They should also see whether the company can reach the low end of its $18.0 billion–$18.2 billion revenue range. See full rankings of all C+ rated Industrials stocks inside the Weiss Stock Screener.
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