Munger Mode rating: 2 out of 5 — Sell. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
We have spent our lives looking for businesses that can raise prices, that customers cannot leave, and that compound owner earnings for decades without asking us for more capital. Leidos is not that business. It is a competent, well-run, cash-generative government services contractor — one of the best in its industry — but its industry is one where the customer is a monopsonist that audits your costs, caps your margins, rebids your contracts, and, as the events of this June demonstrated vividly, can simply decide to do your job itself. The stock has been cut roughly in half from its 52-week high of $205.77, and at $126.85 it trades at about 10x forward earnings with a free cash flow yield approaching 9-10% on normalized numbers. That is genuinely cheap for a company that just grew revenue 7% and raised guidance.
Recent filings analysed: 8-K (2026-08-04), 10-Q (2026-08-04), 8-K (2026-05-06), 8-K (2026-05-05).
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