Leidos Holdings' Backlog Grows: What Does it Mean for Future Revenues?

For defense contractors like Leidos Holdings Inc. LDOS, increasing backlog count serves as a primary revenue growth driver. Notably, a steady flow of contracts for combat-proven defense solutions from the Pentagon and other U.S. allies amid intensifying geopolitical tensions across the globe has been bolstering LDOS’ bookings and, consequently, its backlog count. 

An increasing backlog strengthens future order deliveries, which duly converts into notable sales. This, in turn, ensures a steady stream of revenues and predictable cash flow, strengthening the company’s financial outlook.

Evidently, LDOS recorded a first-quarter 2025 backlog of $46.30 billion, up from $43.56 billion at the end of fourth-quarter 2024. The $43.56 billion backlog improved from the third-quarter 2024 backlog of $40.56 billion. The $40.56 billion backlog also improved from second-quarter 2024 backlog of $36.49 billion. The company’s revenues improved 6.9% year over year in third-quarter 2024, 9.7% in fourth-quarter 2024 and 6.8% in first-quarter 2025. 

We may expect the company to continue to register similar revenue growth in the upcoming quarters, backed by its improving backlog count in the recent past. In line with this, the Zacks Consensus Estimate for LDOS’ 2025 and 2026 revenues suggests a year-over-year improvement of 2.7% and 3.2%, respectively.

Other Defense Stocks Witnessing Solid Backlog

Steady order flows culminating in a solid backlog count also play a vital role in the growth story of other defense contractors like RTX Corp. RTX and Lockheed Martin LMT. 

RTX witnessed a strong defense backlog of $92 billion as of March 31, 2025, backed by solid defense bookings of $9 billion. Its first-quarter sales improved 5.2% to $20.31 billion. Looking ahead, the Zacks Consensus Estimate for RTX’s 2025 and 2026 revenues suggests a year-over-year improvement of 4.2% and 5.8%, respectively.

Lockheed registered a record $173 million of backlog at the end of the first quarter 2025, backed by a handful of multi-million-dollar contracts. Its first-quarter sales improved 4.5% to $17.20 billion. The Zacks Consensus Estimate for LMT’s 2025 and 2026 revenues suggests a year-over-year improvement of 4.7% and 3.7%, respectively.

The Zacks Rundown for LDOS

Shares of LDOS have gained 1.5% in the past year compared with the industry’s 5.2% growth.

The company’s shares are trading at a discount, with its forward 12-month Price/Earnings being 13.66X compared with its industry’s average of 28.48X.

The Zacks Consensus Estimate for LDOS’ 2025 and 2026 earnings has improved over the past 60 days.

LDOS stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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

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