Sometimes you win on the bottom line and still lose on the stock chart. That's what happened to Leidos Holdings Inc. (LDOS) on Tuesday, as shares slid more than 6% despite the defense giant delivering record cash flow and beating profit expectations.

The Numbers Tell Two Stories

Leidos reported fourth-quarter revenue of $4.21 billion, down 4% from a year earlier and missing analyst estimates of $4.31 billion. The shortfall wasn't exactly a mystery. The company pointed to two culprits: fiscal 2024 had an extra work week in the fourth quarter that boosted last year's comparison, and more significantly, a six-week government shutdown during the 2025 fourth quarter put a dent in revenue.

But here's where things get interesting. While the top line disappointed, Leidos crushed profit expectations. Adjusted earnings per share came in at $2.76, up 16% year-over-year and well above the consensus estimate of $2.61. Adjusted EBITDA rose 9% to $556 million, with margins expanding from 11.6% to 13.2%.

The real standout? Operating cash flow hit $495 million, the highest fourth-quarter performance in company history. Management credited strong EBITDA, solid collections, and tight working capital management.

Building the Backlog

Net bookings totaled $5.6 billion for the quarter, giving Leidos a book-to-bill ratio of 1.3. That pushed the total backlog to $49.0 billion at fiscal year-end, with $9.7 billion of that already funded. The company sat on $1.1 billion in cash and equivalents as of January 2, 2026.

Big Bet on Energy

Shortly after the quarter closed, Leidos announced it's acquiring power design firm Entrust for $2.4 billion. The deal, expected to close in the first half of fiscal 2026 pending customary approvals, aims to beef up the company's energy infrastructure capabilities.

CEO Tom Bell framed the move as part of Leidos's broader portfolio transformation, focusing on what the company calls "Growth Pillars" including space and maritime, energy infrastructure, digital modernization, cyber, mission software, and managed health services. He said the company is executing its NorthStar 2030 strategy to deliver better outcomes for national security customers while building long-term shareholder value.

Shareholder Returns Continue

On February 13, 2026, the board declared a quarterly cash dividend of $0.43 per share, payable March 31 to shareholders of record on March 16.

Guidance Doesn't Impress

Here's likely where the stock took its hit. Leidos issued fiscal 2026 revenue guidance of $17.50 billion to $17.90 billion, compared to analyst expectations of $17.89 billion. The midpoint lands squarely in "meh" territory relative to Wall Street's hopes.

Adjusted earnings per share guidance came in at $12.05 to $12.45, versus the consensus estimate of $12.29. Again, not terrible, but not inspiring either.

Leidos Holdings shares were trading down 6.16% at $165.44 on Tuesday.