Leidos Holdings Inc. Reports Strong Fourth‑Quarter Earnings Amid Revenue Decline
Leidos Holdings Inc. (NYSE: LDOS) delivered a fourth‑quarter earnings announcement on February 17, 2026 that surprised analysts on the upside while confirming a modest revenue contraction relative to the previous year. The company’s results, released ahead of its fiscal‑year 2026 guidance, reflected a mix of resilience in high‑margin defense and intelligence contracts and headwinds from a temporary federal shutdown.
Key Financial Highlights
| Metric | Q4 2025 | Q4 2024 | YoY Change |
|---|---|---|---|
| Revenue | $4.20 billion | $4.38 billion | ‑4 % |
| Adjusted Net Income | $327 million | $284 million | +15 % |
| Diluted EPS (Adjusted) | $2.53 | $2.12 | +19 % |
| Non‑GAAP Diluted EPS | $2.76 | $2.53 | +9 % |
The company reported that revenue for the quarter fell 4 % year‑over‑year, a decline largely attributed to the U.S. government’s temporary shutdown, which curtailed procurement of certain defense and intelligence services. Despite the dip in sales, Leidos raised its adjusted earnings by 19 % compared with the same period a year earlier, driven by cost‑control measures and higher margins in its national‑security and health‑care segments.
Guidance for Fiscal 2026
Leidos’ management reiterated its full‑year 2026 outlook in line with analysts’ consensus estimates:
- FY 2026 revenue: $17.2 billion (up 3 % YoY)
- FY 2026 adjusted EPS: $11.14 per share (up 21 % YoY)
The company’s guidance is anchored on a continued demand surge for AI‑enabled cyber‑security solutions and its expanding portfolio in the energy sector, highlighted by a recently announced $2.4 billion acquisition of Entrust Solutions Group. The acquisition is expected to reinforce Leidos’ presence in the critical infrastructure market and provide additional revenue streams in the coming years.
Strategic Initiatives
Leidos’ quarterly report emphasized a strategic realignment that has already begun to yield profitability gains:
- Focus on high‑margin contracts – The company is prioritizing projects in the defense, intelligence, and health arenas, where it commands premium pricing.
- Cost‑efficiency programs – Operational efficiencies have reduced the cost of revenue, enabling better profitability even when top line growth slows.
- Technology and AI expansion – Investment in artificial‑intelligence platforms has accelerated adoption across client organizations, creating a new revenue growth engine.
- Energy‑sector expansion – The Entrust acquisition positions Leidos to capture a larger share of the energy and critical infrastructure markets, complementing its existing cyber‑security capabilities.
Market Reaction
Shares of Leidos traded at $176.30 on February 12, 2026, near the 52‑week low of $123.62 but still 12 % below the 52‑week high of $205.77. The market has responded positively to the earnings beat, with analysts revising their price targets upward after the announcement. The company’s price‑to‑earnings ratio of 16.46 remains attractive compared with peers in the industrials and IT services sectors.
Conclusion
Leidos Holdings Inc. showcased its resilience in a quarter that tested federal procurement cycles. By delivering a solid earnings beat against a backdrop of modest revenue decline, the company has reinforced investor confidence in its strategic shift toward high‑margin, technology‑driven services. With a FY 2026 outlook that aligns with consensus expectations and a robust pipeline of projects across defense, intelligence, health, and energy, Leidos positions itself to capitalize on emerging opportunities while maintaining disciplined cost management.
