Here's Why You Should Include Leidos Stock in Your Portfolio Right Now

Leidos Holdings, Inc. LDOS, with rising earnings estimates, robust ROE, a solid backlog and shareholder-friendly initiatives, offers a great investment opportunity in the Zacks Aerospace Defense industry.

Let’s focus on the reasons that make this Zacks Rank #2 (Buy) stock an attractive investment pick at the moment.

Growth Forecast & Surprise History of LDOS

The Zacks Consensus Estimate for LDOS’ 2025 and 2026 earnings per share (EPS) has increased 1.5% and 0.7%, respectively, over the past 30 days.

The Zacks Consensus Estimate for the company’s total revenues for 2025 stands at $17.11 billion, which indicates growth of 2.7% from the 2024 reported figure. The Zacks Consensus Estimate for its 2026 revenues is pegged at $17.66 billion, which suggests a year-over-year increase of 3.3%.

Leidos’ long-term (three to five years) earnings growth rate is 7.4%. LDOS surpassed expectations in the last four reported quarters and delivered an average earnings surprise of 23.71%.

Rising Backlog of Leidos

Contract wins from the Pentagon and other U.S allies for its cost-effective military technologies are one of Leidos Holdings' key sources of revenues. These contract wins help enhance the company's bookings and backlog.

Leidos had an excellent backlog of $46.30 billion at the end of March 2025 compared with the prior-quarter figure of $43.55 billion. Such significant backlog trends improve the company's revenue-generating possibilities for the following quarters ahead.

LDOS’ Return on Equity

Return on equity (ROE) measures how effectively a company has used its funds to generate higher returns. LDOS currently has an ROE of 32.62% compared to the industry's average of 9.66%. This suggests that the company has been utilizing its funds more effectively than its peers in the sector.

Leidos’ Solvency & Liquidity

Leidos’ times interest earned ratio (TIE) at the end of the first quarter of 2025 was 10.1. The TIE ratio greater than 1 suggests that the company will be able to make its interest payment obligations in the near term without difficulty.

Leidos’ current ratio at the end of the first quarter of 2025 was 1.54. A strong ratio greater than one shows that the company is capable of meeting its future short-term liabilities without difficulty.

LDOS’ Shareholder-Friendly Initiatives

Leidos has increased shareholder value by continuously paying dividends. Currently, the company’s quarterly dividend is 40 cents per share, resulting in an annualized dividend of $1.60. During the first quarter of 2025, the company paid dividends worth $53 million. The company’s current dividend yield is 1.05%, better than its sector’s average of 0.95%.

Leidos also purchased $528 million worth of its shares on the open market in the first quarter, reflecting a solid year-over-year increase of 188.5%.

LDOS Stock Price Performance

In the past three months, LDOS shares have rallied 15.8% compared with the industry’s rise of 7.6%.

Other Stocks to Consider

A few other top-ranked stocks from the same industry are Airbus SE EADSY, which sports a Zacks Rank #1 (Strong Buy), and Howmet Aerospace Inc. HWM and GE Aerospace GE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

EADSY’s long-term earnings growth rate is 4%. The Zacks Consensus Estimate for Airbus’ total revenues for 2025 stands at $82.57 billion, which indicates growth of 10.4%.

HWM’s long-term earnings growth rate is 19%. The Zacks Consensus Estimate for Howmet’s 2025 sales is pegged at $8.07 billion, which implies an improvement of 8.6%.

GE’s long-term earnings growth rate is 15.1%. The company delivered an average earnings surprise of 17.97% in the last four quarters.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research