Why did LDOS's earnings trend upward in 2024?

Leidos Holdings Inc. (LDOS) experienced an upward trend in earnings in 2024 due to several key factors:

1. **Revenue Growth**: Leidos saw significant revenue growth, with a reported increase of 7.9% in full-year revenue, reaching nearly $4.37 billion for Q4, and a robust organic growth rate of 9.7% for the same quarter. The full-year revenue grew by 7.9% to $16.66 billion. This growth was driven by increased demand across all customer segments, particularly in managed health services and national security solutions.
2. **Segment Performance**: The National Security and Digital Segment revenue contributed to the overall growth, with specific highlights in cybersecurity and digital modernization contracts. The segment's revenue increase was a key factor in the company's overall financial performance.
3. **Strategic Initiatives**: Leidos' strategic initiatives, such as the acquisition of certain assets from Raytheon Technologies in 2023, have positioned the company well to capitalize on market opportunities. These strategic moves have enhanced the company's service offerings and market position, leading to improved revenue and profitability.
4. **Market Conditions**: The geopolitical landscape and increased defense spending have created favorable market conditions for defense companies like Leidos. These factors have contributed to the robust demand for weapons and services, which has benefited Leidos' earnings.
5. **Financial Metrics**: Leidos demonstrated strong financial performance with record revenues, adjusted EBITDA of $508 million for Q4, and a margin of 11.6%. The full-year adjusted EBITDA was $2.15 billion with a margin of 12.9%. Non-GAAP net income was $316 million for Q4 and $1.4 billion for the year, with a non-GAAP diluted EPS of $2.37 for Q4 and $10.21 for the year.
6. **Institutional Confidence**: Institutional investors showed confidence in Leidos, with several modifying their holdings, including significant increases by Mather Group LLC and UniSuper Management Pty Ltd. This confidence reflects the company's strong financial performance and growth prospects.

In conclusion, Leidos' earnings trend upward in 2024 due to a combination of revenue growth, strategic initiatives, favorable market conditions, and strong financial performance across its segments and the company as a whole.