$LDOS · Leidos Holdings, Inc.
Leidos Holdings filed its 10-Q for the quarter ended October 2, 2026. Q3 revenue rose 3.6% YoY to $4.63B, with net income attributable to common stockholders of $410M ($3.28 diluted EPS) versus $367M ($2.82) a year ago. For the nine-month period, revenue reached $13.59B (+4.8%) but operating income declined 3.7% to $1.575B as acquisition, integration and restructuring costs ballooned to $74M from $10M. The balance sheet reflects a $2.34B acquisition, pushing long-term debt to $6.0B from $4.6B at year-end. The company also executed aggressive buybacks, repurchasing $508M in Q3 alone.
- Q3 revenue $4.63B (+3.6% YoY), diluted EPS $3.28 vs $2.82 a year ago.
- Nine-month operating income fell 3.7% to $1.575B, with operating margin compressing to 11.6% from 12.6%.
- Acquisition, integration and restructuring costs surged to $74M for nine months vs $10M in prior-year period.
- Long-term debt jumped to $6.0B from $4.6B at fiscal year-end, driven by $2.34B business acquisition.
- Company repurchased $508M of stock in Q3 alone; nine-month buybacks totaled $819M vs $639M last year.
LDOS down 3.19% to $139.56 in regular trading. The nine-month operating income decline and margin compression likely weigh on sentiment despite the strong Q3 EPS beat.
Leidos is delivering strong quarterly EPS growth but funding it with aggressive leverage: debt surged $1.4B in nine months while nine-month operating income is actually declining.
Leidos' four-segment realignment (Intelligence & Digital, Health, Homeland, Defense) mirrors broader defense-sector restructuring toward mission-focused units. Intelligence & Digital led with 21.3% Q3 operating income growth on program wins and improved margins.
Tariff exposure: the filing notes that higher tariffs on imported goods and materials may increase costs, though Leidos expects to recover portions through contractual measures. The $2.34B acquisition also adds integration risk and elevated debt service costs (interest expense up 23% nine-month YoY to $191M).