LDOS

Leidos is a scaled U.S. government technology and services prime, and FY2026 extended a clean run of profitable growth. Revenue rose 3.2% to $17.1B while net income grew 15.5% to $1.45B and diluted EPS jumped 20.8% to $11.14 — operating leverage plus buybacks (shares down 3.6% to 126M) driving EPS well ahead of revenue. Operating margin expanded to 12.3% (management notes 12% vs. 11% prior year), net margin reached 8.5%, and return on equity is an impressive 29.5%. The balance sheet is solid: equity grew 11.4% to $4.92B, current debt was cut 96.8% to $20M, and cash rose 30.5% to $1.11B.

The quality of the business shows in cash conversion and capital allocation. Operating cash flow climbed 22.0% to $1.75B against just $125M of capex, funding $400M of buybacks. Demand is anchored in mission-critical government work — management reports roughly 87% of revenue comes from U.S. government contracts and 49% from the Department of War and Intelligence Community combined — segments where management notes the Administration 'has not indicated a desire to reduce spending in the defense and homeland security sectors.' The NorthStar 2030 strategy and AI-driven enterprise transformation underpin the multi-year growth pillars.