A month has gone by since the last earnings report for Leidos (LDOS Quick QuoteLDOS - Free Report) . Shares have lost about 7.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Leidos due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Leidos Holdings, Inc. before we dive into how investors and analysts have reacted as of late.

LDOS Q1 Earnings Beat on Backlog Scale and Key Contract Wins

Leidos Holdings, Inc. reported first-quarter 2026 non-GAAP earnings of $3.13 per share, beating the Zacks Consensus Estimate of $2.88 by 8.68%. The metric increased 5.4% from $2.97 in the year-ago quarter.

On a GAAP basis, earnings per share were $2.56, down from $2.77 a year ago. Management attributed the year-over-year decline in GAAP results to discrete costs tied to the Entrust acquisition and the pending joint venture involving security-related businesses.

LDOS' Total Revenues

Total revenues came in at $4.40 billion, up 3.7% year over year and above the Zacks Consensus Estimate of $4.27 billion by 3.1%. The company said revenues increased on higher customer demand, particularly across Intelligence programs, commercial energy infrastructure work and domestic and international air traffic management systems.

Demand signals were mixed in the quarter. Net bookings totaled $3.3 billion, translating into a book-to-bill ratio of 0.8, even as management highlighted a trailing-12-month book-to-bill of 1.1 that supported year-over-year growth in contracted activity.

LDOS’ Backlog

Backlog at quarter-end was $48.4 billion, including $9.6 billion funded and $38.8 billion unfunded. The company noted that the funded portion reflects contract value supported by appropriated funding (net of revenues previously recognized), while unfunded backlog includes remaining task-order value and options expected to be executed.

By segment, Intelligence & Digital backlog totaled $19.34 billion, Health was $6.56 billion, Homeland was $9.88 billion and Defense was $12.59 billion. Backlog as of April 3, 2026, also included $371 million acquired through the Entrust acquisition within the Homeland segment.

Operational Statistics of LDOS

Cost of revenues totaled $3.64 billion compared with $3.49 billion in the prior-year quarter. Selling, general and administrative expenses were $223 million compared with $230 million a year ago, while acquisition, integration and restructuring costs increased to $35 million from $4 million.

Operating income was $508 million, down from $530 million in the year-ago period. Interest expense rose to $55 million from $49 million.

Leidos’ Segmental Performance

Intelligence & Digital revenues rose to $1.51 billion from $1.41 billion, supported by recent contract awards and higher volumes for Intelligence Community mission support, along with $22 million of acquisition revenues tied to Kudu 
Dynamics. Non-GAAP operating margin increased to 10.2% from 9.7%.

Health revenues were $1.19 billion, unchanged year over year. Non-GAAP operating margin was 24.2% compared with 24.7% a year ago.

Homeland revenues increased to $816 million from $770 million, driven primarily by continued demand for Energy Infrastructure engineering services and domestic and international air traffic control systems. Non-GAAP operating margin decreased to 8.5% from 9.4% amid changing customer requirements on a fixed-price program.

Defense revenues were $883 million compared with $879 million a year ago, as strong growth in integrated air defense systems offset the wind-down of certain airborne surveillance programs. Non-GAAP operating margin decreased to 8.3% from 9.8%, primarily due to schedule delays on a fixed-price development program.

LDOS’ Financials

Cash and cash equivalents were $457 million at quarter-end, down from $1.11 billion as of Jan. 2, 2026. Long-term debt, net of the current portion, increased to $6.01 billion from $4.63 billion over the same period, reflecting acquisition financing activity.

Net cash provided by operating activities totaled $301 million for the quarter, up from $58 million in the prior-year period. The company also returned capital to shareholders during the quarter, including $243 million in share repurchases and $55 million in dividend payments.

LDOS’ 2026 Guidance

Leidos raised its fiscal 2026 outlook, with revenues now expected in the range of $18.00-$18.40 billion compared with the prior view of $17.50-$17.90 billion. The Zacks Consensus Estimate for revenues is pegged at $17.91 billion, which is below the company’s guided range.

Non-GAAP earnings are now projected at $12.10-$12.50 per share compared with the prior range of $12.05-$12.45. The Zacks Consensus Estimate for earnings is pegged at $12.26 per share, which lies below the midpoint of the company’s guided range.

The company also raised its cash flows provided by operating activities outlook to approximately $1.80 billion from approximately $1.75 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Leidos has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a score of A on the value side, putting it in the top 20% for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Leidos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Leidos belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Cognizant (CTSH Quick QuoteCTSH - Free Report) , has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.

Cognizant reported revenues of $5.41 billion in the last reported quarter, representing a year-over-year change of +5.8%. EPS of $1.40 for the same period compares with $1.23 a year ago.

For the current quarter, Cognizant is expected to post earnings of $1.38 per share, indicating a change of +5.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Cognizant has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.