- Wondering whether Leidos Holdings at around US$155.52 is priced for opportunity or already reflects the story, this article focuses squarely on what the current share price says about value.
- The stock has pulled back recently, with a 2.2% decline over 7 days and an 11.2% decline over 30 days, even though the 1 year return sits at 16.3% and the 3 year return at 75.8%.
- These moves come as the company continues to feature in market commentary around professional services and defense related contractors, putting attention on how investors are weighing growth prospects against risk. For you as a shareholder or potential investor, this context makes it even more important to check whether the recent share price shifts align with a reasonable estimate of value.
- On Simply Wall St's valuation framework, Leidos Holdings currently scores a 6 out of 6 for being undervalued across key checks. Next, you will see how different valuation approaches line up on this scorecard and, by the end, a way to go a step further in judging whether the stock fits your own view of value.
Approach 1: Leidos Holdings Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model takes estimated future cash flows and then discounts them back to today to arrive at an implied per share value.
For Leidos Holdings, the model uses a 2 Stage Free Cash Flow to Equity approach, starting from last twelve months free cash flow of about $1.58b. Analyst estimates feed into projected free cash flow of $1.43b in 2026 and $1.72b in 2028. Further years are extrapolated by Simply Wall St out to 2035 using the same cash flow framework.
On this basis, the DCF output points to an estimated intrinsic value of about $290.14 per share, compared with the recent share price of roughly $155.52. That gap implies the stock is 46.4% undervalued according to this model, which is a wide margin and may be notable if you prefer cash flow based valuation.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Leidos Holdings is undervalued by 46.4%. Track this in your watchlist or portfolio, or discover 58 more high quality undervalued stocks.
Approach 2: Leidos Holdings Price vs Earnings
For a profitable company, the P/E ratio is a useful way to check what you are paying for each dollar of current earnings, which makes it a straightforward cross check against the cash flow based valuation above.
In general, higher growth expectations and lower perceived risk tend to support a higher P/E ratio, while slower growth and higher risk usually point to a lower, more conservative P/E as a reasonable reference point.
Leidos Holdings currently trades on a P/E of 13.53x, compared with the Professional Services industry average of 18.98x and a peer group average of 36.01x. Simply Wall St also provides a proprietary “Fair Ratio” for the stock of 22.19x, which reflects the P/E that might be expected when considering factors such as earnings growth, profit margins, industry, market cap and company specific risks.
This Fair Ratio is more tailored than a simple comparison with industry or peer averages, because it adjusts for the characteristics of Leidos Holdings rather than assuming that all companies should trade at similar levels.
Since the current P/E of 13.53x sits below the Fair Ratio of 22.19x, this multiple based view suggests that the shares are trading at a discount relative to that reference point.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Leidos Holdings Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St’s Community page let you attach your own story about Leidos Holdings to the numbers by linking assumptions about future revenue, earnings and margins into a forecast, turning that into a Fair Value that you can compare with the current share price to help inform your view, and then updating that view automatically when new information like earnings or contract news arrives. One investor might build a bullish Leidos Holdings Narrative that supports a higher fair value closer to US$210 based on confidence in defense tech and AI expansion, while another might use more cautious assumptions around government contract risks and arrive nearer to US$164. This gives you a clear, simple way to see how different perspectives translate directly into different fair value estimates.
Do you think there's more to the story for Leidos Holdings? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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