What Happened?

Shares of defense contractor Leidos (NYSE:LDOS) jumped 9.2% in the afternoon session after the company reported a "beat and raise" quarter. LDOS reported impressive third-quarter earnings results that blew past analysts' backlog expectations. In addition, its revenue and EPS outperformed Wall Street's estimates. Full year guidance was raised as icing on the cake. The strong performance was attributed to improved demand in all customer segments, especially managed health services. Zooming out, we think this quarter featured some important positives.

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What The Market Is Telling Us

Leidos’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

Leidos is up 72.2% since the beginning of the year, and at $186 per share, has set a new 52-week high. Investors who bought $1,000 worth of Leidos’s shares 5 years ago would now be looking at an investment worth $2,153.

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