Leonardo Drs (DRS) AI Stock Analysis

• Market Cap: $9.18B
• Dividend Yield: 1.04%
• Average Volume (3M): 868.06K
• Price to Earnings (P/E): 35.0
• Beta (1Y): 1.13
• Revenue Growth: 12.27%
• EPS Growth: 33.16%
• Country: US
• Employees: 7,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 0.29
• Shares Outstanding: 266,026,730
• 10 Day Avg. Volume: 903,584
• 30 Day Avg. Volume: 868,058
• PEG Ratio: 1.51
• Price to Book (P/B): 3.34
• Price to Sales (P/S): 2.64
• P/FCF Ratio: 45.86
• Enterprise Value/Market Cap: 1.34
• Enterprise Value/Revenue: 3.46
• Enterprise Value/Gross Profit: 14.79
• Enterprise Value/Ebitda: 28.98
• 1Y Price Target: $46.00
• Price Target Upside: 34.19% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 1.09
• Revenue Forecast (FY): $3.58B

• Rating: 70 Outperform
• Price Target: $37.00 ▲(7.93% Upside)

Leonardo DRS exhibits strong financial performance and a positive earnings outlook, contributing to a solid overall score. However, technical indicators suggest bearish momentum, and valuation metrics indicate potential overvaluation, which temper the overall score.

Positive Factors

Revenue Growth

Strong revenue growth indicates robust demand for products and services, enhancing market position and supporting long-term financial stability.

Strategic Partnerships

Partnerships with international defense entities expand market access and align with global defense modernization trends, supporting sustained growth.

Cash Flow Generation

Strong cash flow generation enhances financial flexibility, enabling strategic investments and resilience against economic fluctuations.

Negative Factors

Margin Pressure

Margin contraction due to increased R&D and less favorable program mix could impact profitability if not managed effectively.

Supply Chain Challenges

Supply chain issues can disrupt production and delivery, potentially affecting revenue and operational efficiency if unresolved.

Government Shutdown Concerns

Prolonged government shutdowns may delay contract awards and payments, affecting cash flow and project timelines.

Leonardo Drs Business Overview & Revenue Model

Company Description

Leonardo DRS, Inc., together with its subsidiaries, provides defense products and technologies in the land, air, sea, space, cyber and security, and commercial domains for military applications. It operates in two segments, Advanced Sensing and Computing, and Integrated Mission Systems. The company offers advanced sensor technologies, including infrared systems and sensors for threat detection and situational awareness; uncooled infrared systems and brownout solutions; airborne, ground vehicle mounted, and dismounted soldier electronic warfare (EW) systems; and EW software and training systems, and intelligence solutions. It also provides computing systems for ground vehicles, ships, and submarines; network and data distribution applications; sensor systems; and networked computing infrastructure on military platform. In addition, the company offers force protection systems, such as solutions for counter-unmanned aerial systems, short-range air defense systems, and active protection systems; and power control, distribution, conversion, and propulsion systems, as well as hybrid electric drive propulsion systems, energy storage, gas turbine packages, nuclear instrumentation and controls, and thermal management and refrigeration equipment. It serves the U.S. military, aerospace and defense prime contractors, government intelligence agencies, and international military customers. The company was founded in 1969 and is based in Arlington, Virginia.

How the Company Makes Money

Leonardo DRS generates revenue through multiple key streams, primarily from the sale of defense electronics and systems to government and military organizations. The company earns money by securing contracts with the U.S. Department of Defense and various allied nations, often through competitive bidding processes. Additionally, revenue is generated from long-term support and maintenance contracts for their products, which provide ongoing income. Strategic partnerships with other defense contractors and technology firms also contribute to revenue growth, allowing DRS to offer integrated solutions and access new markets. Furthermore, the company invests in research and development to innovate and expand its product offerings, positioning itself favorably within the defense technology landscape.

Leonardo Drs Financial Statement Overview

Summary

Leonardo DRS demonstrates strong financial health with consistent revenue and profit growth, low leverage, and robust cash flow generation. However, slight pressure on operational margins warrants attention.

Income Statement

Leonardo DRS shows strong revenue growth with a TTM increase of 4.33% and consistent improvement in gross profit margin, now at 23.40%. The net profit margin has also improved to 7.43%, indicating enhanced profitability. However, the EBIT and EBITDA margins have slightly decreased compared to previous years, suggesting some operational cost pressures.

Balance Sheet

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.13, indicating low leverage. Return on equity is solid at 10.22%, reflecting efficient use of equity. The equity ratio stands at 62.37%, showcasing a strong equity base relative to total assets.

Cash Flow

Leonardo DRS has demonstrated robust free cash flow growth of 12.77% in the TTM period, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 1.45, suggesting efficient conversion of income into cash. The free cash flow to net income ratio is 0.69, reflecting a healthy cash flow position relative to earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.57B	3.23B	2.83B	2.69B	2.88B	2.78B
Gross Profit	835.00M	736.00M	648.00M	575.00M	547.00M	494.00M
EBITDA	426.00M	376.00M	313.00M	624.00M	293.00M	229.00M
Net Income	265.00M	213.00M	168.00M	405.00M	154.00M	85.00M
Balance Sheet
Total Assets	4.25B	4.18B	3.92B	3.68B	3.07B	2.96B
Cash, Cash Equivalents and Short-Term Investments	309.00M	598.00M	467.00M	306.00M	240.00M	61.00M
Total Debt	471.00M	458.00M	497.00M	487.00M	490.00M	530.00M
Total Liabilities	1.60B	1.63B	1.60B	1.55B	1.48B	1.53B
Stockholders Equity	2.65B	2.56B	2.33B	2.13B	1.59B	1.43B
Cash Flow
Free Cash Flow	265.00M	186.00M	145.00M	-32.00M	118.00M	69.00M
Operating Cash Flow	384.00M	271.00M	205.00M	33.00M	178.00M	125.00M
Investing Cash Flow	-134.00M	-84.00M	-59.00M	436.00M	39.00M	-70.00M
Financing Cash Flow	-139.00M	-56.00M	15.00M	-403.00M	-38.00M	-80.00M

Leonardo Drs Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 34.28
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRS, the sentiment is Neutral. The current price of 34.28 is above the 20-day moving average (MA) of 33.90, below the 50-day MA of 35.46, and below the 200-day MA of 39.69, indicating a neutral trend. The MACD of -0.31 indicates Negative momentum. The RSI at 48.74 is Neutral, neither overbought nor oversold. The STOCH value of 80.80 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DRS.

Leonardo Drs Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BWXT	75 Outperform	$16.20B	52.99	26.69%	0.56%	14.01%	10.92%
TXT	75 Outperform	$16.01B	19.99	11.46%	0.09%	1.83%	-0.73%
MOG.A	73 Outperform	$8.45B	34.49	12.09%	0.46%	7.11%	13.43%
DRS	70 Outperform	$9.18B	35.01	10.35%	1.04%	12.27%	33.16%
HII	69 Neutral	$13.95B	24.56	12.39%	1.53%	2.60%	-18.22%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
KTOS	60 Neutral	$13.50B	632.74	1.20%	―	14.00%	23.78%

Leonardo Drs Corporate Events

Leonardo DRS Reports Strong Q3 2025 Financial Results

Leonardo DRS reported strong financial results for the third quarter of 2025, with revenue increasing by 18% year-over-year to $960 million. The company also saw a 26% rise in net earnings and a 17% increase in adjusted EBITDA. The growth was driven by strong demand across its product lines, particularly in electric power and propulsion programs. The company declared a $0.09 cash dividend per share and made strategic investments, including increasing its stake in Hoverfly Technologies to 25%.