Leidos Holdings, Inc. (LDOS) DCF Valuation & Fundamental Primer
Leidos Holdings, Inc. (LDOS) currently trades at $195.49 with an enterprise value of $21.54B. Our proprietary institutional model rates Leidos Holdings, Inc. at 77/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 24.5% vs. historical growth of 21.2% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Leidos Holdings, Inc. (LDOS) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Leidos Holdings, Inc. (LDOS) 3-Scenario DCF Valuation Range
Stress-test LDOS's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $195.49).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $192.95 -1% | $205.02 +5% | $219.11 +12% | $235.75 +21% | $255.72 +31% |
| 9.3% | $173.36 -11% | $182.87 -6% | $193.79 -1% | $206.45 +6% | $221.32 +13% |
| 10.0% | $157.26 -20% | $164.91 -16% | $173.57 -11% | $183.47 -6% | $194.90 -0% |
| 10.8% | $143.81 -26% | $150.06 -23% | $157.06 -20% | $164.98 -16% | $173.98 -11% |
| 11.5% | $132.40 -32% | $137.58 -30% | $143.34 -27% | $149.77 -23% | $157.02 -20% |
Institutional Software Quality Scorecard (77/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Elite deferred revenue float; FCF exceeds operating income by >20%
Elevated equity dilution; SBC consumes substantial operating cash flow
High-quality software margins with healthy balanced growth and profitability
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 257% of EBIT driven by upfront annual collections
- Healthy unit economics: 74.9% gross margin
- Net cash positive: $653.3M balance sheet buffer
Key Operational & Dilution Risks
- Substantial SBC dilution drag: SBC is 20.0% of revenue ($568.1M)
Reverse-DCF Solver: What Growth is Priced Into LDOS?
Market implies 24.5% annual revenue growth over next 5 years (40.7% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (20.0% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 40.7% 5-year revenue CAGR to justify $195.49/sh on a true per-share economic cash flow basis.
Leidos Holdings, Inc. (LDOS) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $2.84B | $2.84B | $3.44B | $4.17B | $5.06B | $6.13B | $7.43B |
| Gross Profit | $2.13B | $2.13B | $2.58B | $3.12B | $3.79B | $4.59B | $5.56B |
| Operating Income (EBIT) | $289.7M | $289.7M | $351.1M | $425.6M | $515.8M | $625.1M | $757.7M |
| Stock-Based Compensation (SBC) | $568.1M | $568.1M | $688.5M | $834.4M | $1.01B | $1.23B | $1.49B |
| Unlevered Free Cash Flow (FCF) | $744.2M | $744.2M | $901.9M | $1.09B | $1.32B | $1.61B | $1.95B |
| SBC-Adjusted True Cash Flow | $176.1M | $176.1M | $213.4M | $258.7M | $313.5M | $380.0M | $460.5M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -30.2 + 0.82 × (Rule of 40) · R² = 80%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Leidos Holdings, Inc. | LDOS | $24.99B | $2.84B | 74.9% | 26.2% | 47.4% | 20.0% | 8.6× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 8.6× | $24.34B | $24.99B | $195.49 | 0.0% |
| -20% Multiple Compression | 6.9× | $19.47B | $20.13B | $157.41 | -20.0% |
| -35% Multiple Compression | 5.6× | $15.82B | $16.48B | $128.86 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $14.20B | $14.85B | $116.18 | -41.7% |
Frequently Asked Questions: Leidos Holdings, Inc. (LDOS) Valuation
What is Leidos Holdings, Inc. (LDOS)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Leidos Holdings, Inc. (LDOS) has a Base Case implied value of $173.57 per share (with a Bear Case of $76.32 and a Bull Case of $310.60), compared to its current price of $195.49. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Leidos Holdings, Inc. (LDOS)'s Rule of 40 score and Free Cash Flow margin?
Leidos Holdings, Inc. achieves a Rule of 40 score of 47.4%, combining a 21.2% revenue growth run-rate with a 26.2% TTM free cash flow margin on $2.84B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into LDOS stock according to Reverse-DCF analysis?
At $195.49 per share (Enterprise Value of $24.34B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 24.5%, compared to Leidos Holdings, Inc.'s historical CAGR of 21.2%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Leidos Holdings, Inc. compare to Software & Cloud Services software peers?
Leidos Holdings, Inc. (LDOS) earns an institutional Software Quality Score of 77/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Leidos Holdings, Inc. (LDOS)'s valuation?
Leidos Holdings, Inc. recorded $568.1M in TTM stock-based compensation (20.0% of revenue). When treating SBC as a cash-equivalent compensation expense, Leidos Holdings, Inc.'s SBC-adjusted free cash flow yield is 0.7%, scoring 10/25 on our Shareholder Dilution Friction pillar.