Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Leidos (LDOS) reported Q2 2026 revenue of $4.4B (+3.7% YoY), but net income fell 9.6% to $328M as higher costs and a significant acquisition-driven balance sheet expansion weighed on margins and cash balances.
Revenue
$4.4B
+3.65% YoY
EPS (Diluted)
$2.56
-7.58% YoY
Operating Income
$508M
-4.15% YoY
Source: SEC XBRL
Leidos Holdings (LDOS) reported Q1 FY2026 revenue of $4.4B, up 3.7% year over year. Operating margin was 11.5%, down 1.0 points from 12.5% a year earlier. Operating cash flow was $301M, up 419.0% year over year. LDOS's fiscal Q1 FY2026 corresponds to calendar Q2 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026 | 3.26 | 2.97 | Beat +9.9% |
| Mar 2026This filing | 3.13 | 2.96 | Beat +5.9% |
| Dec 2025 | 2.76 | 2.66 | Beat +3.8% |
| Sep 2025 | 3.05 | 2.77 | Beat +10.3% |
Adjusted (non-GAAP) EPS of $3.13 versus the $2.96 analyst consensus — a +5.9% beat for Mar 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $2.56.
Compiled by AI from this SEC filing
Leidos grew Q2 2026 revenue to $4.4B, up $155M or 3.7% YoY from $4.245B, indicating continued demand for its defense and government IT services despite a challenging macro environment.
Source: 10-Q Income Statement (XBRL Financial Data)
Cost of revenue rose 4.3% YoY to $3.639B, outpacing revenue growth of 3.7%, which compressed operating margin from 12.5% to 11.5%. Operating income declined 4.2% to $508M, signaling cost pressures in contract execution.
Source: 10-Q Income Statement (XBRL Financial Data)
Total assets surged 16.6% YoY to $15.387B while total liabilities rose 16.1% to $10.323B, strongly suggesting a significant acquisition was completed during the period. Investing cash outflows of -$2.359B (vs. -$22M prior year) and financing inflows of $1.393B corroborate this.
Source: 10-Q Balance Sheet & Cash Flow Statement (XBRL Financial Data)
Operating cash flow improved dramatically to $301M from just $58M in the prior year period (+419% YoY), suggesting improved working capital management and cash conversion despite lower net income.
Source: 10-Q Cash Flow Statement (XBRL Financial Data)
SG&A expenses declined 3.0% YoY to $223M, demonstrating disciplined overhead cost management even as the company expanded its revenue base and integrated potential new operations.
Source: 10-Q Income Statement (XBRL Financial Data)
Compiled by AI from this SEC filing · 2 high, 3 medium, 0 low
The company appears to have completed a large acquisition in Q2 2026, with investing outflows of $2.359B and total liabilities rising to $10.323B, pushing the debt-to-equity ratio to 2.06x. Integration challenges, cost overruns, or failure to realize synergies could pressure future earnings and cash flows. Elevated leverage also increases financial risk in a rising interest rate environment.
Source: 10-Q Balance Sheet & Cash Flow Statement (XBRL Financial Data)
Cost of revenue grew faster (4.3%) than revenue (3.7%) in Q2 2026, compressing operating margin by approximately 94 basis points to 11.5%. If labor, subcontractor, or material costs continue to outpace contract pricing, profitability could deteriorate further.
Source: 10-Q Income Statement (XBRL Financial Data)
Cash and equivalents fell 45.7% YoY to $457M, largely due to the major acquisition. While the current ratio remains adequate at 1.40x, the reduced cash buffer limits financial flexibility for near-term obligations or unexpected disruptions.
Source: 10-Q Balance Sheet (XBRL Financial Data)
Net income dropped 9.6% to $328M and diluted EPS fell 7.6% to $2.56, even as revenue grew 3.7%. This divergence between top-line growth and bottom-line performance may reflect acquisition-related costs, higher interest expense from new debt, or integration charges.
Source: 10-Q Income Statement (XBRL Financial Data)
As a defense and government IT services company, Leidos is highly dependent on U.S. federal government spending and contract renewals. Any government budget cuts, continuing resolutions, or contract losses could materially impact revenue and operating income.
Source: 10-Q Income Statement (XBRL Financial Data)
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 4.40 $B | 4.25 $B | +3.65% |
Cost of Revenue $B | 3.64 $B | 3.49 $B | +4.33% |
Operating Income $M | 508.00 $M | 530.00 $M | -4.15% |
Net Income $M | 328.00 $M | 363.00 $M | -9.64% |
EPS (Basic) $ | 2.60 $ | 2.79 $ | -6.81% |
EPS (Diluted) $ | 2.56 $ | 2.77 $ | -7.58% |
SG&A Expense $M | 223.00 $M | 230.00 $M | -3.04% |
Answers draw on this SEC filing and the data on this page
Leidos reported Q2 FY2026 revenue growth of 7.2% driven by the Entrust acquisition and homeland strength, but operating income fell 10% as higher costs and integration expenses weighed on profitability, while backlog and cash flow trends remained robust.
Leidos (LDOS) delivered strong FY2025 results with revenue growing 3.1% to $17.2B, while operating income surged 15.4% to $2.1B and net income rose 15.5% to $1.4B, reflecting meaningful margin expansion and robust cash generation.
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