Leidos Holdings Gains 5% in a Year: Buy, Hold or Sell the Stock?

Core Viewpoint - Leidos Holdings Inc. (LDOS) has demonstrated strong stock performance, rising 4.5% over the past year, outperforming the Zacks Aerospace-Defense industry and broader sector, which saw declines of 5.8% and gains of 1.9% respectively [1][2]. Company Performance - Leidos Holdings has a solid backlog of contracts, totaling $43.55 billion at the end of Q4 2024, an increase from$40.56 billion in the previous quarter, indicating strong future revenue generation prospects [4][5]. - The company's financial health is robust, with cash and cash equivalents of $0.94 billion and current debt of$0.62 billion, reflecting a strong solvency position [6]. Industry Outlook - The global defense industry is poised for growth due to escalating geopolitical tensions, leading to increased military spending and demand for advanced technologies [7]. - The adoption of AI and data analytics in defense strategies is reshaping the industry, enhancing operational efficiency and preparedness against evolving threats [7][8]. Earnings Estimates - The Zacks Consensus Estimate indicates a year-over-year sales growth of 2.6% for 2025 and 3.6% for 2026, with earnings per share estimates increasing by 1.9% and 4.6% respectively over the past 60 days, reflecting analysts' growing confidence in the company's earnings growth [11][12]. Valuation - Leidos Holdings is currently trading at a forward P/E ratio of 12.53X, which is below the industry average of 22.14X, suggesting a favorable valuation for investors [19].