Leidos trades at $183.35 and has moved in lockstep with the market. Its shares have returned 16.2% over the last six months while the S&P 500 has gained 11.3%.
Is now the time to buy LDOS? Find out in our full research report, it’s free for active Edge members.
Why Does LDOS Stock Spark Debate?
Formed through the split of IT services company SAIC, Leidos (NYSE:LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Two Positive Attributes:
1. Surging Backlog Locks In Future Sales
We can better understand Defense Contractors companies by analyzing their backlog. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Leidos’s future revenue streams.
Leidos’s backlog punched in at $47.66 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 15.2%. This performance was fantastic and shows the company has a robust sales pipeline because it is accumulating more orders than it can fulfill. Its growth also suggests that customers are committing to Leidos for the long term, enhancing the business’s predictability. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Leidos’s EPS grew at a spectacular 15.2% compounded annual growth rate over the last five years, higher than its 7.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
One Reason to be Careful:
Lackluster Revenue Growth
Long-term growth is the most important, but within industrials, a stretched historical view may miss new industry trends or demand cycles. Leidos’s annualized revenue growth of 6.9% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. 
Final Judgment
Leidos’s merits more than compensate for its flaws, but at $183.35 per share (or 15.8× forward P/E), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free for active Edge members .
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