Leidos initiates $500 million share buyback

Leidos Holdings , Inc. (NYSE:LDOS), a $16.6 billion market cap leader in computer integrated systems design, has announced the commencement of an accelerated share repurchase agreement (ASR) to buy back $500 million of its common stock. The transaction falls under the company’s current share repurchase authorization. According to InvestingPro data, management has been consistently aggressive with share buybacks, while maintaining dividend payments for 14 consecutive years.

The initial payment for the repurchase was made on Monday, with Leidos disbursing $500 million to a financial counterparty and receiving approximately 3 million shares in return. The final number of shares repurchased will depend on the volume-weighted average price of Leidos’ stock during the ASR term, after accounting for a discount and any adjustments as per the agreement’s terms. The timing appears opportune, as the stock currently trades near its 52-week low of $123.22, with InvestingPro analysis suggesting the stock is undervalued.

The ASR agreement allows for the possibility of the counterparty delivering additional shares to Leidos, or, in some cases, Leidos may need to provide shares or cash to the counterparty. The final settlement is anticipated to occur in the second quarter of 2025, though it could be completed earlier at the counterparty’s discretion.

The move to repurchase shares reflects the company’s ongoing strategy to manage its capital and return value to shareholders. This information is based on a press release statement filed with the SEC on Monday, February 24, 2025. The company’s stock, listed on the New York Stock Exchange under the ticker LDOS, may see fluctuations in trading volume and price as a result of this announcement and the ongoing repurchase activity.

In other recent news, Leidos Holdings reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of $2.37, surpassing the forecast of $2.26. The company also reported quarterly revenue of $4.37 billion, which was higher than the anticipated $4.13 billion, marking a 10% year-over-year increase. Looking forward, Leidos provided an optimistic outlook for fiscal year 2025, projecting earnings per share between $10.35 and $10.75, above the consensus of $10.11, and revenue between $16.9 billion and $17.3 billion, exceeding the expected $16.43 billion. In a separate financial move, Leidos issued $1 billion in senior unsecured notes to manage its debt portfolio and fund various corporate purposes, including potential acquisitions and stock repurchases. Additionally, Jefferies analyst Sheila Kahyaoglu adjusted the price target for Leidos stock to $155 from $160, maintaining a Hold rating despite the company’s strong financial performance and improved free cash flow. Leidos reported an 8% increase in organic revenue growth and a 29% rise in EBITDA for 2024, although it provided a conservative growth outlook for 2025. The company’s net bookings for the quarter totaled $7.6 billion, contributing to a year-end backlog of $43.6 billion, an 18% increase year-over-year. Leidos also announced a quarterly cash dividend of $0.40 per share, payable on March 28, 2025.

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