Leidos Holdings, Inc. LDOS, with rising earnings estimates, robust ROE and a solid backlog, offers a great investment opportunity in the Zacks Aerospace Defense industry.

Let’s focus on the reasons that make this Zacks Rank #2 (Buy) stock an attractive investment pick at the moment.

Growth Projections & Surprise History of LDOS
 

The Zacks Consensus Estimate for Leidos’ 2025 earnings per share (EPS) has increased 1.2% to $10.44 in the past 60 days. The Zacks Consensus Estimate for the company’s total revenues for 2025 stands at $17.09 billion, which indicates growth of 2.6% from the 2024 reported figure.

Leidos’ long-term (three to five years) earnings growth rate is 7.4%. It delivered an average earnings surprise of 28.34% in the last four quarters.

LDOS’ Return on Equity
 

Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, LDOS’ ROE is 30.93% compared to its industry’s average of 9.53%. This indicates that the company has been utilizing its funds more constructively than its peers in the sector.

Leidos’ Debt Position
 

Currently, the company’s total debt to capital is 50.03%, better than the industry’s average of 55%.

Leidos’ times interest earned ratio (TIE) at the end of the fourth quarter of 2024 was 9.5. The TIE ratio of more than 1 indicates that the company will be able to meet its interest payment obligations in the near term without any problems.

LDOS’ Liquidity
 

Leidos’ current ratio at the end of the fourth quarter of 2024 was 1.21. The strong ratio of greater than 1 indicates the company’s ability to meet its future short-term liabilities without difficulties.

Rising Backlog of Leidos
 

Contract wins from the Pentagon and other U.S allies for its cost-effective military technologies are one of Leidos Holdings' key sources of revenues. These contract wins help enhance the company's bookings and backlog.

Leidos had an excellent backlog of $43.6 billion as of Jan. 3, 2025, up from $37 billion in the prior year. Such significant backlog trends improve the company's revenue-generating possibilities for the following quarters.

LDOS Stock Price Performance
 

In the past year, LDOS shares have rallied 6.8% against the industry’s decline of 5.5%.

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Other Stocks to Consider
 

A few other top-ranked stocks from the same sector are Kratos Defense & Security Solutions, Inc. KTOS, RTX Corporation RTX and FTAI Aviation Ltd. FTAI, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KTOS delivered an average earnings surprise of 70.63% in the last four quarters. The Zacks Consensus Estimate for KTOS’ total revenues for 2025 stands at $1.28 billion, which indicates growth of 12.2% from the 2024 estimated figure.

RTX’s long-term earnings growth rate is 9.7%. The Zacks Consensus Estimate for RTX’s 2025 sales is pegged at $84.28 billion, which implies an improvement of 4.4% from the 2024 reported sales figure.  

FTAI delivered an average earnings surprise of 30.65% in the last four quarters. The Zacks Consensus Estimate for FTAI’s total revenues for 2025 stands at $2.06 billion, which indicates growth of 20.2% from the 2024 estimated figure.

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