Leidos Holdings (LDOS)·Q4 2026 Earnings Summary

Leidos Beats EPS by 7% But Revenue Misses; Stock Drops 4% on Soft Guidance

February 17, 2026 · by Fintool AI Agent

Leidos Holdings (LDOS) reported Q4 FY2025 results this morning, delivering its 8th consecutive quarter of EPS beats with Non-GAAP EPS of $2.76 (+7.4% vs consensus) . However, revenue of $4.21 billion came in slightly below the $4.25 billion estimate, dragged down by a six-week government shutdown and one less work week compared to the prior year period . The stock dropped approximately 4% in after-hours trading, as investors digested modest FY2026 guidance and the $2.4 billion Entrust acquisition announcement .

Did Leidos Beat Earnings?

EPS: Beat by 7.4% | Revenue: Missed by 1.0%

The revenue decline was primarily attributed to two factors: (1) an extra work week in Q4 FY2024 due to Leidos' 4-4-5 fiscal calendar, and (2) a six-week government shutdown during Q4 FY2025 . Together, these factors lowered year-over-year revenue comparisons by an estimated 7 percentage points for the quarter .

Beat/Miss Streak: 8 Consecutive Beats

Leidos has beaten EPS estimates for 8 consecutive quarters, demonstrating consistent execution:

What Did Management Guide?

Leidos initiated FY2026 guidance with modest growth expectations:

The muted margin guidance (mid-13% vs 14.1% in FY2025) likely reflects integration costs from the Entrust acquisition and mix shift toward lower-margin commercial energy work .

How Did the Stock React?

LDOS closed the regular session at $176.30 (+2.8%) but fell approximately 4% in after-hours trading to $169.02 following the earnings release. The selloff appears driven by:

1. Guidance disappointment — FY2026 EPS guidance midpoint of $12.25 implies only ~2% growth despite strong bookings
2. Margin compression — Mid-13% EBITDA margin guide vs 14.1% achieved in FY2025
3. Acquisition integration risk — $2.4B Entrust deal introduces execution risk

52-Week Range: $123.62 - $205.77 | Current: $169.02 (aftermarket)

What Changed From Last Quarter?

New 4-Segment Operating Structure

Effective FY2026, Leidos has reorganized from its previous structure into four new reportable segments :

$2.4 Billion Entrust Acquisition

After quarter-end, Leidos announced the acquisition of Entrust, a power design firm, for $2.4 billion . Key details:

• Strategic rationale: Broadens utility client base and strengthens energy infrastructure capabilities
• Expected close: First half of fiscal 2026
• Integration focus: Entrust's engineering expertise spans generation to transmission/distribution across gas and electric utilities

Segment Performance: Legacy Structure

Under the previous reporting structure (Q4 FY2025 vs Q4 FY2024):

Key drivers:

• Health & Civil margin expansion driven by technology efficiencies and cost management
• Defense Systems saw dramatic margin improvement from program maturation into production phase
• Health & Civil revenue decline reflects managed health services headwinds

Business Development: Strong Book-to-Bill

Notable Contract Awards

1. ABADS-MD (Air Base Air Defense) — $2.2 billion, 5-year Air Force award for ALPS and MRADR radar systems

2. Cloud One Next (C1N) ACSS — $455 million, 6-year Air Force contract for multi-cloud platform

3. MDA SHIELD IDIQ — Prime position on $151 billion ceiling, 10-year homeland defense contract

4. DMEA ATSP5 — Position on $24.5 billion ceiling, 10-year technology support contract

Cash Flow & Capital Allocation

Balance sheet at quarter-end:

• Cash: $1.1 billion
• Total Debt: $4.6 billion
• Shares outstanding: 126.4M (down from 131.2M YoY)

Dividend increase: Board declared quarterly dividend of $0.43/share (+7.5% YoY) payable March 31, 2026

Management Commentary

CEO Tom Bell emphasized strategic positioning and resilience:

"Our performance this quarter and throughout the year underscores the incredible resilience of our team and the power of our strategy in action. In a dynamic market environment, we delivered solid top-line growth, outstanding earnings power, and robust cash generation, which provide a strong foundation for future investment."

Bell highlighted five Growth Pillars driving the NorthStar 2030 strategy :

1. Space and maritime
2. Energy infrastructure
3. Digital modernization and cyber
4. Mission software
5. Managed health services

Risks & Concerns

1. Government budget uncertainty — Continued exposure to federal spending priorities and potential shutdowns
2. Acquisition integration — $2.4B Entrust deal introduces execution and financing risks
3. Margin pressure — FY2026 guidance implies ~100bps margin compression
4. Health & Civil headwinds — Managed health services business creating revenue variability

Forward Catalysts

• Entrust close — Expected H1 FY2026; watch for integration updates
• SHIELD task orders — $151B IDIQ provides significant upside potential
• Government budget resolution — Continuing resolution creates uncertainty; full-year appropriations would provide visibility
• Q1 FY2026 earnings — May 2026; first quarter under new 4-segment structure

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Data sources: Leidos Holdings 8-K filed February 17, 2026; S&P Global Market Intelligence; Zacks Investment Research