A Look At Leidos Holdings (LDOS) Valuation After Recent Share Price Pullback

Leidos Holdings (LDOS) has seen its share price retreat recently, with a 3.1% decline over the past day, around 2% over the past week, and close to 10% over the past month.

That shorter term weakness follows a larger past 3 months pullback of roughly 21.5% and a year to date decline of about 15.2%, even as the 1 year total return remains positive at 12.5%.

Behind the stock is a sizeable government and commercial services business, generating US$17.2b in revenue and US$1.4b in net income. This is spread across several segments with different growth drivers and risk profiles.

The National Security & Digital segment is the largest contributor at US$7.6b in revenue. It is focused on national security software, artificial intelligence and machine learning enabled coordination across domains, and a wide range of cyber, intelligence, logistics, training, and digital modernization services.

Health & Civil adds US$5.1b, with offerings that include air traffic control systems, health mission software, managed health services, and infrastructure and IT support. Commercial & International contributes US$2.3b through power grid services, security scanning systems, and software development.

The Defense Systems segment generates US$2.2b and is tied to air and missile defense, maritime and aerospace solutions, cyber and threat systems, airborne training and ISR missions, and space based payloads. This links the company closely to long term defense and security programs.

See our latest analysis for Leidos Holdings.

The recent pullback in Leidos Holdings’ share price, including a 9.8% 1 month share price decline, contrasts with its 12.5% 1 year total shareholder return. This suggests that momentum has faded even as longer term holders remain ahead.

If you are weighing defense and infrastructure exposure after Leidos’ recent moves, it can be helpful to see what else is on the radar through 30 power grid technology and infrastructure stocks

With Leidos trading at US$155.63, alongside an intrinsic value estimate suggesting around a 49% discount and a sizeable gap to analyst targets, investors may need to consider whether this weakness signals an opportunity or if markets already reflect expectations for future growth.

With Leidos closing at $155.63 against a narrative fair value of $209.07, the most followed view sees a meaningful valuation gap built on long term contracts and digital programs.

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, as these capabilities command premium pricing and are in areas of secular growth.

The core of this story is how steady contract work, modest growth assumptions, and a higher future earnings multiple come together in one valuation playbook. Curious which revenue and earnings paths need to hold for that fair value to stack up, and how much room the model gives for margin pressure or contract risks before the numbers stop working.

Result: Fair Value of $209.07 (UNDERVALUED)

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

However, this depends on continued U.S. federal funding and smooth acquisition integration, as policy shifts or deal missteps could quickly challenge the current valuation story.

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

With mixed views on both risks and rewards around Leidos, now is a good time to look through the details yourself and decide how the balance sits for you, starting with 5 key rewards and 1 important warning sign

If you stop at Leidos, you could miss other opportunities that better fit your goals, so consider a few alternatives before you decide.

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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Provides services and solutions for government and commercial customers in the United States and internationally.

Very undervalued with solid track record and pays a dividend.