Leidos (NYSE: LDOS) Beats Q2 EPS, Raises 2026 Guidance on $4.56B in Revenue

Leidos Holdings (NYSE: LDOS) posted Q2 2026 revenue of $4.56 billion, up 7.2% year-over-year, while adjusted EPS of $3.26 topped the $2.97 consensus by 9.9%. The company simultaneously raised its full-year 2026 revenue guidance to $18.20 billion to $18.40 billion and lifted its non-GAAP diluted EPS range to $12.20 to $12.50. Shares fell -2.87% on Wednesday, August 5, 2026, while the S&P 500 declined 0.20%.

Q2 2026 Results

• Revenue: $4.56 billion, up 7.2% from $4.25 billion in Q2 2025, including 4% organic growth
• Adjusted EPS: $3.26, up 1.6% from $3.21 in Q2 2025, beating the $2.97 consensus estimate
• GAAP EPS: $2.81, down 6.6% from $3.01 in Q2 2025
• Adjusted EBITDA: $631 million, with an adjusted EBITDA margin of 13.8% versus 15.2% in the year-ago quarter
• Free cash flow: $761 million for the quarter; operating cash flow of $793 million
• Net bookings: $4.9 billion, yielding a book-to-bill ratio of 1.1; backlog reached $48.7 billion

What Drove the Results

Adjusted EPS of $3.26 beat the $2.97 consensus by $0.29, or 9.9%. On a GAAP basis, however, net income declined 9.4% to $356 million from $393 million in Q2 2025, and GAAP EPS fell 6.6% to $2.81 from $3.01. The divergence between GAAP and non-GAAP results reflects $29 million in costs tied to the acquisition of ENTRUST Solutions Group and a pending joint venture with Analogic Corporation, as well as restructuring costs from the company's NorthStar 2030 realignment program. The year-ago quarter also benefited from a $25 million insurance reimbursement for legal costs that did not recur. Adjusted EBITDA margin contracted 1.4 percentage points to 13.8%, with management citing disciplined cost execution as a partial offset.

Revenue growth was driven by increased customer demand for defense technology products, energy and air traffic management solutions, and intelligence mission support. Key contract wins in the quarter included a $475 million follow-on U.S. Air Force contract for F-16 diagnostic support, a $456 million General Services Administration contract to manage the Military OneSource program serving more than 4.7 million service members, a $350 million U.S. Air Force Electronic Warfare contract modification, and a $270 million Customs and Border Protection contract for non-intrusive inspection systems. Total funded backlog grew 44% year-over-year to $10.2 billion.

Wall Street View

Multiple analyst firms updated their views around the Q2 print. BNP Paribas analyst Matt Akers maintained an Outperform rating and raised his price target to $175 from $165, citing the company's defense growth profile. RBC Capital analyst Ken Herbert also maintained an Outperform rating but trimmed his target to $170 from $180, noting in separate commentary that Leidos' diversified portfolio, including Homeland Security strength, remains underappreciated by the market. UBS analyst Gavin Parsons maintained a Neutral rating and raised his price target to $138 from $124.

Investor Takeaway

The quarter's core story is a widening gap between GAAP and non-GAAP results as Leidos absorbs integration costs from the ENTRUST acquisition and the Analogic joint venture formation, costs that are currently masking underlying operational progress. The raised FY26 revenue floor of $18.20 billion and lifted operating cash flow guidance to approximately $1.85 billion provide a concrete signal that management sees near-term Health segment pressure as manageable. The $48.7 billion backlog and trailing-twelve-month book-to-bill of 1.1 represent a multi-year demand foundation that investors weighing the non-GAAP EPS trajectory against the GAAP drag may find relevant when assessing the stock's forward P/E of 9.7x.