Leidos falls 6.5% after quarterly earnings beat but trims sales outlook

What happened

Leidos (LDOS) fell 6.5% on November 3, 2026, because its third-quarter results beat EPS estimates but missed revenue and the company trimmed its sales outlook. The company reported non-GAAP diluted earnings per share of $3.62 against $3.03 expected, 19.5% above estimates, and said it updated its 2026 EPS and cash-flow guidance while trimming sales projections. News outlets including Seeking Alpha and Zacks Investment Research reported the results, and PRNewsWire reported that Leidos is mobilizing its supply chain to scale production of long-range cruise missiles.

How big was the move

The stock closed at $134.72, with trading volume 2.5 times its 20-day average and the session sized at 3.1 times a typical daily move for this stock. The opening was 7.2% below the previous close. Leidos underperformed the Technology sector median by 7.2 percentage points; the sector rose 0.7% while the S&P 500 rose 0.4% on the day. The company’s market value was $17.94 billion.

The technical picture

The stock traded 3.6% above its 20-day moving average and 4.2% above its 50-day moving average, while it was 4.2% below its 200-day moving average. The 50-day average is below the 200-day average, a sign of a weak longer-term trend. The Relative Strength Index (14 days) was 55, inside a neutral range between 30 and 70. Leidos was 34.5% below its 52-week high. The shares have risen 12.8% over one month and 6.2% over three months, but fell 29.3% over one year, trailing the S&P 500 by 39.9 percentage points. Volatility was 33% annualized over 60 days, higher than 78% of its own readings over five years.

Fundamentals and valuation

For the four quarters through October 2, 2026, revenue was $17.80 billion, which grew 2.7% from a year earlier, and diluted earnings per share were $11.18, which rose 4.3% from a year earlier. Gross margin was 17.3% (a year earlier: 17.6%) and operating margin was 11.4% (a year earlier: 11.9%). The company reported free-cash-flow margin of 11.3% and return on invested capital of 14.4%, with a balance sheet showing net cash of $93.0 million. The share count over one year decreased by 4.0%.

Valuation shows the stock at 12.1 times trailing earnings and 10.9 times expected earnings, with a free-cash-flow yield of 11.2%. Its price to trailing earnings is lower than 95% of its own readings over the past five years, compared with a five-year median of 18.6 times earnings. PromtFinance ranks its Value 99 (Exceptional) and Stability 92 (Exceptional), while Growth is 31 (Weak) and Momentum is 30 (Weak).

The combination of a relatively low price-to-earnings multiple and a high free-cash-flow yield suggests investors are valuing Leidos more for income and balance-sheet strength than for growth. That view is consistent with the PromtFinance scores, which rate Value and Stability highly while Growth and Momentum rank weak.

Earnings and analyst expectations

Leidos reported quarterly revenue of $4.6 billion, net income of $413 million and non-GAAP diluted EPS of $3.62, a 19% year-over-year increase. Adjusted EBITDA was $644 million with a 13.9% margin. The company reported operating cash flow of $523 million and non-GAAP free cash flow of $476 million. The firm has beaten earnings estimates in 14 consecutive quarters, with an average surprise of 11.3% above estimates over the last four reports.

Analysts set a consensus price target of $150.88, 12.0% above the closing price, based on ratings from 28 analysts. Fifty-seven percent of those ratings are Buy or Strong Buy and the consensus rating is Buy. Typical two-day reactions after recent reports showed the stock fell 0.1%.

Earnings were the direct cause of the session’s move: the company beat EPS estimates but missed revenue and trimmed sales guidance, prompting investors to reassess near-term top-line momentum despite solid cash generation and margins. In the past five years the stock had six sessions with a decline of at least 6.5%; twenty trading days later the median result was a decline of 6.0%, and two of six were higher.

What to watch

• November 3, 2026: Company updated its 2026 EPS and cash-flow guidance while trimming its sales outlook
• Quarterly figures: revenue reported at $4.6 billion and non-GAAP diluted EPS of $3.62 (19% year-over-year increase)
• Balance sheet metric: net cash of $93.0 million
• Analyst consensus: price target $150.88, 12.0% above the closing price
• Production mobilization: scaling manufacturing for LCCM and AGM-190A Havoc Spear missiles