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Leonardo Drs
(NASDAQ:DRS)
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Rating:75Outperform
Price Target:
$52.00
▲(8.11% Upside)
Action:Reiterated
Date:07/30/26
DRS scores well primarily on improving financial performance (growth, better margins, stronger free cash flow, and notably lower leverage) and a constructive earnings update with raised profitability guidance and strong backlog/bookings visibility. The score is held back by valuation (high P/E with a low dividend yield) and limited technical confirmation beyond moving averages due to missing momentum indicators.
Positive Factors
Improving revenue, margins and free cash flow
Sustained top-line growth, margin expansion and materially stronger free cash flow signal durable operational improvement. This enhances financial flexibility to fund R&D, capacity and M&A, supports shareholder returns, and reduces solvency risk across the next several quarters.
Negative Factors
Revenue conversion and timing risk
Shifting mix toward solutions increases contract complexity and calendarized milestones, which can delay revenue recognition and amplify working‑capital swings. That elongation raises quarter‑to‑quarter volatility in cash and reported revenue over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Improving revenue, margins and free cash flow
Sustained top-line growth, margin expansion and materially stronger free cash flow signal durable operational improvement. This enhances financial flexibility to fund R&D, capacity and M&A, supports shareholder returns, and reduces solvency risk across the next several quarters.
Read all positive factors
Leonardo Drs (DRS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.17B
Dividend Yield0.78%
Average Volume (3M)1.10M
Price to Earnings (P/E)70.8
Beta (1Y)1.07
Revenue Growth10.46%
EPS Growth28.28%
CountryUS
Employees7,300
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.65
Shares Outstanding266,762,100
10 Day Avg. Volume887,489
30 Day Avg. Volume1,102,887
Financial Highlights & Ratios
PEG Ratio1.10
Price to Book (P/B)3.31
Price to Sales (P/S)2.48
P/FCF Ratio39.84
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$52.67Price Target Upside9.49% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)1.34
Revenue Forecast (FY)$3.94B
Leonardo Drs Business Overview & Revenue Model
Company Description
Established in Arlington, Virginia, in 1969, Leonardo DRS, Inc. is a leading supplier of advanced defense products and technologies. The company's diverse portfolio addresses military requirements across various environments, including land, air, ...
How the Company Makes Money
DRS makes money primarily by selling defense products and services under contracts with the U.S. Department of Defense and other government customers (and, to a lesser extent, allied/foreign governments and defense prime contractors). Revenue is t...
Leonardo Drs Earnings Call Summary
Earnings Call Date:Jul 30, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 04, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and financial momentum: double-digit organic revenue growth (10% YoY), substantial adjusted EBITDA growth (33% YoY) and margin expansion (240 bps), record funded backlog, robust bookings (> $1B) and strengthened cash generation. Management raised profit guidance and announced a strategic, accretive acquisition (RAFT) to expand AI/data-fusion software capabilities. Near-term caveats include expected Q3 margin normalization due to a one-time program risk retirement benefit in Q2, timing-related revenue conversion risks as backlog shifts toward solutions, and typical budget timing uncertainty. Overall, the positives (growth, margin expansion, backlog, disciplined M&A and cash flow) outweigh the highlighted near-term caveats.Positive Updates
Revenue Growth and Quarterly Results
Q2 revenue of $913 million, up 10% year-over-year (organic revenue growth accelerated to 10% YoY). IMS led with 15% segment growth and ASC grew 8%.
Negative Updates
Q3 Margin Normalization
Management expects Q3 adjusted EBITDA margin in the mid-13% range (sequential step-down from Q2) due to a nonrecurring program risk retirement gain that boosted Q2 margins; implies some normalization in near-term profitability.
Read all updates
Q2-2026 Updates
Positive
Negative
Revenue Growth and Quarterly Results
Q2 revenue of $913 million, up 10% year-over-year (organic revenue growth accelerated to 10% YoY). IMS led with 15% segment growth and ASC grew 8%.
Read all positive updates
Company Guidance
Management reiterated full-year revenue guidance of $3.90–$3.975 billion (implying 7–9% organic growth) while raising adjusted EBITDA to $525–$540 million (up from $515–$530M) and targeting adjusted diluted EPS of $1.34–$1.39; the company assumes a 16.5% tax rate and a diluted share count of 269 million, and noted the guidance excludes RAFT (expected to close in Q4 and be accretive in the first full year). Q2 actuals underpinning the outlook included $913 million of revenue (+10% YoY), adjusted EBITDA of $128 million (+33%) and a 14% adjusted EBITDA margin (+240 bps), net earnings of $86 million (+59%) and diluted EPS of $0.32, adjusted net earnings of $94 million and adjusted diluted EPS of $0.35; bookings exceeded $1 billion with book-to-bill of 1.2x (18 consecutive quarters ≥1.0) and a record funded backlog. On cash and investment metrics, Q2 free cash flow was positive, management expects ~75% conversion of adjusted net earnings to free cash flow for the full year, CapEx is expected to run in the mid‑4% of revenue range, and R&D is approaching 4% of revenue (R&D up 16% YTD); looking into Q3 they expect revenue above $1 billion and an adjusted EBITDA margin in the mid‑13% range (reflecting the nonrecurring Q2 program‑risk retirement benefit).Leonardo Drs Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
82
Very Positive
Cash Flow
78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.78B | 3.65B | 3.23B | 2.83B | 2.69B | 2.88B |
| Gross Profit | 923.00M | 847.00M | 736.00M | 648.00M | 575.00M | 547.00M |
| EBITDA | 442.00M | 437.00M | 376.00M | 313.00M | 624.00M | 293.00M |
| Net Income | 322.00M | 278.00M | 213.00M | 168.00M | 405.00M | 154.00M |
Balance Sheet | ||||||
| Total Assets | 4.20B | 4.62B | 4.18B | 3.92B | 3.68B | 3.07B |
| Cash, Cash Equivalents and Short-Term Investments | 270.00M | 647.00M | 598.00M | 467.00M | 306.00M | 240.00M |
| Total Debt | 149.00M | 470.00M | 458.00M | 497.00M | 487.00M | 490.00M |
| Total Liabilities | 1.39B | 1.89B | 1.63B | 1.60B | 1.55B | 1.48B |
| Stockholders Equity | 2.80B | 2.73B | 2.56B | 2.33B | 2.13B | 1.59B |
Cash Flow | ||||||
| Free Cash Flow | 363.00M | 227.00M | 186.00M | 145.00M | -32.00M | 118.00M |
| Operating Cash Flow | 501.00M | 366.00M | 271.00M | 205.00M | 33.00M | 178.00M |
| Investing Cash Flow | -152.00M | -154.00M | -84.00M | -59.00M | 436.00M | 39.00M |
| Financing Cash Flow | -357.00M | -163.00M | -56.00M | 15.00M | -403.00M | -38.00M |
Leonardo Drs Technical Analysis
Positive
48.10
Price Trends
45.65
Positive
44.77
Positive
41.38
Positive
Market Momentum
0.48
Negative
63.38
Neutral
86.49
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRS, the sentiment is Positive. The current price of 48.1 is above the 20-day moving average (MA) of 45.55, above the 50-day MA of 45.65, and above the 200-day MA of 41.38, indicating a bullish trend. The MACD of 0.48 indicates Negative momentum. The RSI at 63.38 is Neutral, neither overbought nor oversold. The STOCH value of 86.49 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DRS.
Leonardo Drs Risk Analysis
Leonardo Drs disclosed 55 risk factors in its most recent earnings report. Leonardo Drs reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Leonardo Drs Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $13.22B | 32.73 | 14.06% | 0.29% | 15.65% | 78.52% | |
75 Outperform | $12.17B | 70.85 | 10.79% | 0.75% | 10.46% | 28.28% | |
69 Neutral | $14.98B | 16.09 | 11.93% | 0.08% | 8.80% | 19.82% | |
68 Neutral | $15.17B | 44.75 | 27.91% | 0.60% | 21.39% | 19.25% | |
65 Neutral | $12.61B | 19.43 | 12.89% | 1.91% | 13.97% | 25.77% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
54 Neutral | $8.66B | 269.52 | 1.26% | ― | 21.82% | 34.38% |
* Industrials Sector Average
DRS
Leonardo Drs
46.05
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11.26%
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Leonardo Drs Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial DisclosuresM&A Transactions
Leonardo DRS Posts Strong Q2 Results, Raises Guidance
Positive
Jul 30, 2026
On July 30, 2026, Leonardo DRS reported strong second-quarter 2026 results, with revenue rising 10% year-over-year to $913 million and net earnings jumping 59% to $86 million. Adjusted EBITDA climbed 33% to $128 million, margins expanded, bookings...
Business Operations and StrategyFinancial DisclosuresM&A TransactionsPrivate Placements and Financing
Leonardo DRS to Acquire Raft in AI Expansion
Positive
Jul 28, 2026
On July 28, 2026, Leonardo DRS announced a definitive agreement to acquire Raft LLC in an all-cash deal valued at $450 million, aimed at bolstering its multi-domain AI, data fusion and mission software capabilities for national security customers....
Executive/Board ChangesShareholder Meetings
Leonardo DRS Shareholders Approve Directors, Pay and Auditor
Positive
May 14, 2026
At its May 14, 2026 annual meeting of stockholders, Leonardo DRS, Inc. reported that shareholders elected all nominated directors, including Frances F. Townsend, Gail S. Baker, John A. Baylouny, Dr. Louis R. Brothers, General George W. Casey Jr., ...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Leonardo DRS Raises 2026 Outlook After Strong Q1 Results
Positive
May 5, 2026
On May 5, 2026, Leonardo DRS reported first-quarter 2026 results showing revenue of $846 million, up 6% year over year, with net earnings rising 24% to $62 million and adjusted EBITDA climbing 28%, driven by strong execution in tactical radars, in...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.