---
title: "Leidos (LDOS) raises its dividend days before Q3 earnings: what the numbers show"
canonical_url: https://www.stockexpertai.com/journal/2026-10-31/leidos-ldos-raises-its-dividend-days-before-q3-earnings-what-the-numbers-show-b846a04c9352
last_updated: 2026-10-31T04:54:38.805Z
section: "Sector Spotlight"
author: "Stock Expert AI Research"
publisher: Stock Expert AI
tickers: LDOS
content_type: journal-article
---

# Leidos (LDOS) raises its dividend days before Q3 earnings: what the numbers show

_Leidos raised its quarterly dividend on Oct. 30, 2026, after a second quarter in which free cash flow rose sharply while operating margin slipped._

![Data cover: Leidos (LDOS) raises its dividend days before Q3 earnings: what the numbers show](/public-objects/streetnews/2026-10-31/SECTOR_SPOTLIGHT-cover-9c913180.jpg)
Stock Expert AI data cover: figures from Financial Modeling Prep; background is an illustrative public-domain photo, credited on the image.

Leidos Holdings (NYSE: LDOS), a US government technology and defense contractor, said on Oct. 30, 2026 that its board raised the quarterly cash dividend, and it reports third-quarter results on Nov. 3, 2026. The raise is small, but it follows a second quarter with free cash flow of $761.0M, the highest of the last five quarters, even as profit margins narrowed. This piece looks at the theme of **cash-rich government contractors** and uses Leidos as the example.

*Figures are current as of Oct. 30, 2026. Financial results cover the second quarter of fiscal 2026, which ended July 3, 2026, unless stated otherwise.*

## Key facts

- **Oct. 30, 2026:** Leidos declared a higher quarterly dividend, according to its release. The latest quote on Oct. 30 was 142.98 USD, up 1.39%, within a 52-week range of 98.86-205.77 USD.
- **Q2 FY2026 (ended July 3, 2026):** revenue was $4.56B, up 7.2% from the year-earlier quarter. Net income was $356.0M, down 9.0%.
- **Q2 FY2026 free cash flow:** $761.0M, compared with $457.0M in the quarter ended July 4, 2025.
- **Aug. 4, 2026:** Leidos reported earnings per share (EPS) of 3.26 against an analyst estimate of 2.91, and revenue of $4.56B against an estimate of $4.44B.
- **Next report, Nov. 3, 2026:** analysts expect EPS of 3.03 and revenue of $4.71B for the third quarter.
- **Valuation (trailing 12 months):** price-to-earnings (P/E) of 13.23 and a dividend yield of 1.2%.

| Metric | Q2 FY2026 | Q2 FY2025 (year-ago) |
|---|---|---|
| Revenue | $4.56B | $4.25B |
| Operating income | $507.0M | $571.0M |
| Net income | $356.0M | $391.0M |
| Diluted EPS (as reported) | 2.81 | 3.01 |
| Operating margin | 11.1% | 13.4% |
| Free cash flow | $761.0M | $457.0M |

## What happened

**The theme.** Government contractors sell technology, engineering and services to agencies such as the Pentagon, intelligence agencies and health programs. Contracts tend to run for years, so revenue is relatively predictable. Margins are thin compared with software companies, so investors often judge these firms by how much cash they turn into dividends, share buybacks and debt reduction. Free cash flow means cash from operations minus capital spending. It is the money left over for those uses.

**The dividend.** Leidos said its board declared a quarterly cash dividend that is a modest step higher than the previous one. The release gave the payment and record dates but no commentary on strategy. Leidos pays a dividend yield of 1.2% on a trailing basis, so dividends provide a modest income return at the current price.

**The second quarter.** Revenue grew 7.2% from a year earlier. Net income fell 9.0%, and diluted EPS as reported was 2.81, below 3.01 a year earlier. The EPS of 3.26 that beat the 2.91 estimate is the figure the data provider compares with analyst forecasts. It differs from the as-reported 2.81. Companies in general sometimes adjust for items such as acquisition-related costs, but our data does not say what Leidos excluded. Check the company's own reconciliation if the difference matters to you.

By business, Leidos reported revenue of $1.49B in Intelligence & Digital, $1.09B in Health, $1.02B in Homeland and $955.0M in Defense. The year-ago segment data in our source uses different segment names, so we do not compare segments year over year.

## Why it matters for investors

**Margins are the weak spot.** The quarterly trend shows what changed:

| Quarter ended | Revenue | Gross margin | Operating margin | Net income | Free cash flow |
|---|---|---|---|---|---|
| July 4, 2025 | $4.25B | 18.4% | 13.4% | $391.0M | $457.0M |
| Oct. 3, 2025 | $4.47B | 18.4% | 12.0% | $367.0M | $680.0M |
| Jan. 2, 2026 | $4.21B | 16.0% | 11.2% | $335.0M | $452.0M |
| Apr. 3, 2026 | $4.40B | 17.3% | 11.5% | $328.0M | $270.0M |
| July 3, 2026 | $4.56B | 17.9% | 11.1% | $356.0M | $761.0M |

This table shows two things. First, gross margin (revenue left after direct costs) fell to 16.0% in the quarter ended Jan. 2, 2026 and has recovered to 17.9%. Second, operating margin has fallen from 13.4% to 11.1% over the past year, despite a small uptick in the quarter ended Apr. 3, 2026, so costs below the gross line are taking a larger share. Revenue is growing, but profit per dollar of sales is lower than a year ago.

**Cash is strong, but it moves around.** Free cash flow was $761.0M in the latest quarter and $270.0M in the one before. Cash flow at contractors in general can swing from quarter to quarter, and our data does not show what drove Leidos' swings. One strong quarter does not set a trend. In the latest quarter Leidos spent $72.0M on buybacks and $55.0M on dividends. Buyback spending was $243.0M in the quarter ended Apr. 3, 2026 and $305.0M in the quarter ended Jan. 2, 2026, so it slowed in a quarter of strong free cash flow.

**Valuation versus peers.** Leidos trades at a P/E of 13.23 on a trailing basis, with price-to-sales of 1.02 and price-to-free-cash-flow of 8.30. Peers in our data:

| Company | P/E | Net margin |
|---|---|---|
| Leidos (LDOS) | 13.23 | 7.9% |
| Booz Allen Hamilton (BAH) | 13.68 | 7.1% |
| CACI International (CACI) | 27.57 | 5.5% |
| Leonardo DRS (DRS) | 27.71 | 9.4% |
| Amentum (AMTM) | 26.35 | 1.4% |

Leidos is priced close to Booz Allen and well below the other three, while its net margin is higher than all peers except Leonardo DRS.

**What analysts think.** Of 28 ratings, 16 are Buy and 12 are Hold, with no Sell ratings, and the consensus is "Buy." Analyst price targets average 150.88 USD (median 155.00 USD), ranging from a low of 130.00 USD to a high of 170.00 USD. The latest quote of 142.98 USD sits inside that range. On Oct. 8, 2026, JP Morgan downgraded the stock from Overweight to Neutral. Citigroup kept its Buy rating on Oct. 7, 2026, and TD Cowen and Jefferies kept Hold ratings on Oct. 6, 2026.

**Our MoonshotScore.** Stock Expert AI's MoonshotScore V2 for Leidos is 72.4, rated "Strong." Compared with other companies in its sector, valuation is the best pillar at 88, followed by growth at 72, momentum at 67 and quality at 67. Safety is the weak pillar at 37. That fits the balance sheet below.

## What could go wrong

- **Debt.** Total debt was $6.58B against cash and short-term investments of $748.0M, leaving net debt of $5.83B as of July 3, 2026. Debt-to-equity is 1.24. The Altman Z score (a bankruptcy-risk gauge) is 3.23 and the Piotroski score (a 0-9 financial health check) is 6, which are middling-to-healthy readings but not a wide cushion.
- **Margin pressure.** If operating margin keeps falling, EPS growth will lag revenue growth.
- **Insider activity.** In the last 90 days, the recent filings we checked show no open-market insider purchases and 3 sales. Older filings in that window may be missing, so treat this as a partial picture.
- **Price history.** At 142.98 USD, the stock is well below its 52-week high of 205.77 USD.

## What to watch next

- **Nov. 3, 2026:** third-quarter results. Consensus is EPS of 3.03 and revenue of $4.71B. Watch whether operating margin stays near 11.1% or moves back toward the levels of a year ago.
- **Free cash flow:** whether the strong second quarter repeats or the quarter reverts toward the lower first-quarter level.
- **Buybacks versus debt:** whether Leidos pays down borrowing or returns to larger repurchases.
- **Analyst revisions:** whether more firms follow JP Morgan's move to a neutral view.
- **Dividend dates:** the release lists a December 2026 record date and payment date for the new dividend.

## Frequently asked questions

## Q: Did Leidos raise its dividend in October 2026?

Yes. Leidos said on Oct. 30, 2026 that its board declared a quarterly cash dividend higher than the previous quarterly payment. The trailing dividend yield is 1.2%.

## Q: When does Leidos report third-quarter earnings, and what do analysts expect?

Leidos is scheduled to report on Nov. 3, 2026. Analysts expect EPS of 3.03 and revenue of $4.71B for the quarter.

## Q: Is Leidos stock cheap compared with other defense contractors?

On trailing earnings, Leidos has a P/E of 13.23, close to Booz Allen's 13.68 and well below CACI at 27.57, Leonardo DRS at 27.71 and Amentum at 26.35. A low multiple can reflect lower growth or higher risk, such as Leidos' debt and slipping operating margin, so it is not a verdict on the stock. This is not investment advice.

*Sources: market data, financial statements, analyst estimates and the MoonshotScore come from Stock Expert AI's data feeds as of Oct. 30, 2026. The dividend announcement comes from the company's Oct. 30, 2026 press release. Third-party news headlines were used for context only.*


*This is educational content, not investment advice. Past performance does not guarantee future results.*

## Related Tickers
- [LDOS](https://www.stockexpertai.com/stock/ldos)

## Sources
- [Stock Expert AI LDOS page: quote, financials and MoonshotScore](https://www.stockexpertai.com/stock/ldos)
- [prnewswire.com: Leidos Holdings, Inc. Increases Quarterly Cash Dividend by 4.7%](https://www.prnewswire.com/news-releases/leidos-holdings-inc-increases-quarterly-cash-dividend-by-4-7-302924879.html)
- [zacks.com: Why the Market Dipped But Leidos (LDOS) Gained Today](https://www.zacks.com/stock/news/3020018/why-the-market-dipped-but-leidos-ldos-gained-today?cid=CS-STOCKNEWSAPI-FT-fundamental_analysis|yseop_template_6-3020018)
- [zacks.com: Leidos Holdings to Release Q3 Earnings: Here's What to Expect](https://www.zacks.com/stock/news/3019444/leidos-holdings-to-release-q3-earnings-here-s-what-to-expect?cid=CS-STOCKNEWSAPI-FT-analyst_blog|earnings_preview-3019444)

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_Written by Stock Expert AI's research desk with AI assistance. Figures come from FMP data and the official sources cited in the article. Educational research, not financial advice._