Leidos Raises 2026 EPS Outlook as Q3 Adjusted EPS Jumps 18.7% to $3.62
Leidos raised its 2026 adjusted earnings forecast for the third straight quarter after third-quarter non-GAAP earnings per share jumped 18.7% to $3.62, even as it trimmed its revenue outlook to reflect a newly formed joint venture.
Revenue rose 3.6% to $4.63 billion from $4.47 billion a year earlier, according to the earnings release Leidos filed with an 8-K on Monday. Net income increased 11.9% to $413 million, and diluted EPS climbed 16.3% to $3.28 from $2.82.
The defense and government IT contractor said growth came from demand for defense tech products, air traffic management and intelligence mission support, plus its acquisition of ENTRUST Solutions. That offset declines in some managed health and federal civilian IT programs. Adjusted EBITDA rose 4.5% to $644 million, for a margin of 13.9% versus 13.8%.
"Leidos delivered another quarter of strong financial performance, allowing us to enhance our 2026 guidance for the third consecutive quarter," CEO Tom Bell said in the release.
Homeland surges, Health slips
Homeland was the standout segment, with revenue up 32.1% to $1.02 billion on demand for air traffic management and electric power distribution engineering, including $142 million from ENTRUST. Its operating margin widened to 7.9% from 6.5%.
Health went the other way. Revenue fell 11.7% to $1.07 billion and the operating margin narrowed to 22.5% from 26.8%, which the company attributed to expected program shifts and lower volumes on managed health services programs. Intelligence & Digital revenue grew 1.4% to $1.55 billion, and Defense revenue rose 3.4% to $992 million.
Bookings and backlog
Net bookings totaled $5.5 billion, a book-to-bill ratio of 1.2. Backlog reached $49.6 billion at quarter-end, of which $11.1 billion was funded. The largest awards listed in the release included a $717 million Air Force intelligence, surveillance and reconnaissance contract and a $672 million Transportation Security Administration equipment deployment contract.
Guidance: higher EPS, lower revenue
Leidos closed its deal with Altaris on Oct. 5, contributing its Security Enterprise Solutions and Industrial Automation businesses to a new joint venture. After adjusting for that, it now expects 2026 revenue of $18.00 billion to $18.20 billion, down from $18.20 billion to $18.40 billion.
Non-GAAP diluted EPS guidance rose to $12.50 to $12.70 from $12.20 to $12.50. The company kept its adjusted EBITDA margin outlook in the mid-13% range and expects operating cash flow of an estimated $1.90 billion, the company said, up from an estimated $1.85 billion.
Cash returned to shareholders
Leidos returned $556 million to shareholders in the quarter, including $504 million of share repurchases and $52 million of dividends. On Oct. 30, the board declared a quarterly dividend of $0.45 per share, a 4.7% increase, payable Dec. 31 to holders of record on Dec. 15.
By the numbers
- Revenue: $4.63 billion, up 3.6%
- Diluted EPS: $3.28, up 16.3%
- Non-GAAP diluted EPS: $3.62, up 18.7%
- Backlog: $49.6 billion
- 2026 non-GAAP EPS outlook: $12.50 to $12.70, raised
- Quarterly dividend: $0.45, up 4.7%
Sources
- Leidos Holdings Form 8-K with third-quarter fiscal 2026 earnings release, filed Nov. 2, 2026 (accession 0001336920-26-000290)
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