• If you are wondering whether Leidos Holdings at around US$160 a share still offers value or if most of the upside is already on the table, this article will help you frame that question clearly.
• The stock has returned 3.0% over the last week, while the 30 day and year to date returns of a 10.5% decline and a 12.4% decline sit alongside a 16.1% return over 1 year, 79.5% over 3 years and 71.1% over 5 years.
• Recent headlines around Leidos have focused on its role as a major U.S. government contractor, particularly in defense, intelligence and technology services. This tends to keep the company in focus whenever contract awards or policy priorities make news, and this backdrop often influences how investors think about the balance between growth potential and contract or budget related risks.
• On Simply Wall St's valuation checks, Leidos scores a full 6 out of 6. The sections ahead will compare different valuation approaches before highlighting a broader way to think about what that score really means for you.

Leidos Holdings delivered 16.1% returns over the last year. See how this stacks up to the rest of the Professional Services industry.

Approach 1: Leidos Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model projects a company’s future cash flows and then discounts them back to today’s dollars to estimate what the whole business might be worth right now.

For Leidos Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $1.58b. Analyst and model projections, expressed in today’s terms, range from discounted free cash flow of $1.34b in 2026 to $1.05b in 2035, with 2028 free cash flow projected at $1.74b before discounting. Estimates beyond the next few years are extrapolated by Simply Wall St rather than coming directly from analysts.

On this basis, the DCF model points to an estimated intrinsic value of about $292.06 per share. Compared with a share price around $160, this implies the stock is roughly 45.0% below the DCF estimate. This indicates that Leidos screens as significantly undervalued on this method alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Leidos Holdings is undervalued by 45.0%. Track this in your watchlist or portfolio, or discover 64 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Leidos Holdings.

Approach 2: Leidos Holdings Price vs Earnings

For profitable companies, the P/E ratio is a useful way to relate what you pay for a share to the earnings that each share currently generates. It helps you judge how the market is pricing those earnings in light of what investors expect and the risks they see.

In general, higher growth expectations and lower perceived risk can support a higher P/E, while slower expected growth or higher risk usually argue for a lower one. Leidos trades on a P/E of about 14.0x, compared with the Professional Services industry average of about 19.1x and a peer group average of about 35.8x.

Simply Wall St’s Fair Ratio for Leidos is 20.51x. This is a proprietary estimate of what a reasonable P/E might be, given factors such as earnings growth, profit margins, industry, market cap and key risks. Because it is tailored to the company, it can be more useful than a simple comparison with industry or peer averages, which do not adjust for those differences.

With the current P/E of 14.0x below the Fair Ratio of 20.51x, Leidos screens as undervalued on this metric.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.

Upgrade Your Decision Making: Choose your Leidos Holdings Narrative

Earlier the article mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St give you a clear story behind the numbers by connecting your view of Leidos Holdings, including how you see its government and AI contracts, future revenue, earnings and margins, to a financial forecast and then to your own fair value. You can easily compare that with the current price to decide whether the stock looks attractive or stretched. The platform keeps that view up to date as news, earnings or guidance change. Different investors can express very different Narratives on the Community page. For example, one investor might focus on defense tech and AI contracts more than the analyst consensus fair value of US$209.07 and bullish target of US$235.00, while another might focus on Veterans Benefits Administration related risks and sit closer to the bearish US$165.00 view. Yet both use the same simple framework that links story, forecast and value.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.