Leidos Holdings (LDOS 3.84%) reported better-than-expected quarterly results this morning, helping ease concerns that efforts by the task forced called the Department of Government Efficiency (DOGE) would eat into earnings. Investors cheered the results, sending Leidos shares up 4% around 2 p.m. ET.

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Strong results across the board

Leidos is the largest pure-play "Beltway Bandit," a term given to the group of defense contractors focused on providing IT (information technology) and other services to defense and civil government agencies. The company earned $2.97 per share in the reported quarter on $4.25 billion in revenue, topping Wall Street's $2.50 per share on sales of $4.1 billion consensus estimate.

The company posted 7% year-over-year revenue gains thanks to strength in all segments, fueled by higher demand for veteran medical exams, international military sales, and space sensors. The higher-than-expected medical business also led to more than a 100-basis-point beat on operating margin.

"Our robust first-quarter results build on the momentum from 2024, demonstrating the team's ability to execute in a dynamic environment that demands agility and innovation," Leidos CEO Tom Bell said in a statement.

The company also bought back about $500 million in shares in the quarter.

Is Leidos a buy?

The company's book-to-bill was a disappointment, with new awards coming in about half of the rate of sales in the quarter. But some of that is timing, and backing out to look at the data for the last 12 months shows a healthier 1.3x number. Leidos reiterated its guidance for the year, implying modest year-over-year revenue growth in 2025.

The near-term outlook could be choppy, and Leidos could still fall victim to contracts deemed unessential and cut by DOGE, but the long-term outlook is unchanged. For investors looking for a slow and steady grower tied to the U.S. defense budget, Leidos deserves a spot on the radar.